Franchise Prospector » Research & Buying
Understanding the Uniform Franchise Offering Circular (UFOC)
A Guide to Researching Franchise Opportunities
Weeks of research have finally paid off - you've found a terrific franchise opportunity. Congratulations! But before you run and sign on the dotted line, you need to find out if this business is really as good as it appears to be. Your job now? To thoroughly investigate the Uniform Franchise Offering Circular, or UFOC.
The Federal Trade Commission (FTC) demands that a franchisor provide full disclosure to a prospective franchisee in the form of the UFOC. By law, you must be given the document at least 10 days before signing any franchise agreement or during your first face-to-face meeting, whichever comes first.
Designed to supply you with all the information you need to fully consider a franchise offering, the UFOC is your prime source of business knowledge - it's your encyclopedia of franchise information, so to speak.
Each UFOC follows the same three-part format, no matter what franchise opportunity it represents. Included in the first portion of the document are 23 sections which describe every aspect of the franchise program. The second section contains a set of the franchisor's audited financial statements, while the third section supplies a copy of each of the forms or contracts you'll sign if you buy the franchise.
Even though the UDOC document may seem thick and intimidating, don't make the error that many prospective franchisees make and push the document aside-study it! While you're reading, take note of any questionable areas you discover and dig deeper whenever possible.
NEXT: Key UFOC Items
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