The FDD franchise disclosure document is the newer and better version of the UFOD but it is just as important to the process of buying a franchise.

The FDD franchise disclosure document was introduced to the franchising world by the Federal Trade Commission who are the government big shots who say what goes and what doesn’t go in the franchising universe.  Despite the fact that the development of this important franchising document was done by the government, it is a nice step forward to bring the franchising process into the new century without too much discomfort.

During the process of buying a franchise, a number of franchise agreements fly back and forth between the franchisee and the franchisor. What the FDC is working hard to make a reality in making the FDD franchise disclosure document part of the process is that every detail of disclosure takes place between the two partners in a franchise before signatures are put on the final franchise agreements and money makes the trip from one bank account to another.

While the uniform franchise offering circular served a long and distinguished term keeping franchise transactions honest and above board, it was due for a facelift.  The FDD franchise disclosure document was that facelift. One of best improvements on the old fashioned system of franchise disclosure is that it cleared up the timing of when these documents had to be delivered to the franchisor for review.  By making sure all of the players knew the rules of the game, that made the tricky process of franchise purchase negotiation just a little less tricky.

Finally franchise disclosure information can be exchanged electronically and efficiently.

Whatever other criticisms we might have of the powers that be, in some sections of the government, there are some good things happening. How this important franchise disclosure document is managed is one of those improvements. When the UFOC became the FDD franchise disclosure document, one big improvement came in how it can be shared between franchisee and franchisor.

No longer is it absolutely essential that bulky packages have to crawl through the mail system and clutter up your mailbox.  Now the franchisee can deliver the FDD franchise disclosure document to you electronically. For most people, working with documents in digital form has become as natural as having a cup of coffee.  And now you can have this crucial franchise information on your computer screen instead of all over your living room floor. This gives you all of the tools of the computer age to review and manage it.

By getting the FDD franchise disclosure document in digital form, you can search it, cut and paste from it and even pass it along to your franchise advisors and lawyers easily and without cost.  The big shots in Washington even took their upgrade to the FDD franchise disclosure document one step further and made it possible to sign the document and make it official using electronic signatures.

Naturally some care must be taken to make sure the exchange of sensitive franchise information is kept between you and the franchisee.  But those protections are entirely possible in the world of cyberspace. It is worth taking those precautions to have the improvements that the FDD franchise disclosure document has brought to the franchising process and to the franchising world as well.

Conquering the Uniform Franchise Offering Circular Template is just one of many challenges that are waiting for you as you build your successful franchise.

You might think of the Uniform Franchise Offering Circular Template as the huge step forward in your quest to own your own franchise. It is in reality the step where the “rubber hits the road”. There is a lot of hard work that will go into turning your new franchise into the gold mine of profits that you want it to be. Understanding this important document is one of those challenges that may take an investment of hard work. But it will be entirely worth it.  That is because the Uniform Franchise Offering Circular Template represents one of the largest disclosures of crucial information about the business partnership that you are about to enter just before you sign the franchise agreement and set up shop as a small business owner.

Don’t fall to pieces when you see how much information is at your fingertips in the Uniform Franchise Offering Circular Template. But at the same time, do not throw it aside and ignore it because your awareness of what is in this critical franchise document is what will make or break your hopes and dreams to become wealthy franchise owner.

To say that the Uniform Franchise Offering Circular Template is a detailed document about the franchise agreement you are about to review is an understatement.  This document should become your bible as a point of reference about every aspect of how the franchise relationship will work, what is expected of you and what kind if support you can expect of those back at the home office as well.

The Uniform Franchise Offering Circular Template will be your encyclopedia of franchising now and going forward as well.

When the Uniform Franchise Offering Circular Template shows up in your mailbox, instead of running to hide because of how much is there, receive it with excitement. That is because the exchange of this document is a big step forward toward that big day when you sign the franchise. The Uniform Franchise Offering Circular Template will spell out in much greater detail a wide variety of information about the company that is franchising their business and about the legal and financial details for you to review. It will be much more detailed than the franchise agreement that will represent the formal start of setting up your new business.

In total, the Uniform Franchise Offering Circular Template will lay out in far more detail than you could have imaged 23 different categories of franchise information.  It is literally the “soup to nuts” document that should answer every question about the franchise opportunity you want to sink your teeth into.

When you put your autograph on the franchise agreement to launch your exciting new life as a franchise small business owner, the assumption and expectation will be that you have read every paragraph line and punctuation mark of the Uniform Franchise Offering Circular Template. The only document that does such an amazing job of giving you a crash course in franchising will be the franchise operations manual that you will get as you get started actually setting up your new business.

So pay attention to Uniform Franchise Offering Circular Template when it shows up at your door. Take your time reading it, reviewing it and make every section of it your own. If you do that, your chances of making it big in the franchising game will skyrocket.

 

Review of the UFOC or the Uniform Franchise Offering Circular Is step one toward owning your own profitable franchise

Every industry is loaded down with weird acronyms.  To become a guru of franchising, be sure you know all about the the Uniform Franchise Offering Circular or the UFOC for short. It is one of the “must do” hoops to jump through before you can strike it rich franchising a business.

There is no dodging this step in your noble journey toward franchising. The franchise offering circular is a step on that journey worth dawdling on a bit.  The franchise offering circular is a physical document that will show up on your doorstep from the company selling the franchise to you. This is not junk mail so jump all over the franchise offering circular. It is chock full of information that you need to know.

If you ever made a document your Bible, the franchise offering circular is one you should know inside and out.  The law requires that every detail about what will happen when that franchise transaction hits the books has to be spelled out in the franchise offering circular. That means that who you have to salute is in there and how you can expect to be saluted is in there too.

The franchise offering circular must be written in language that people speak.

Don’t run into the closet and hide from the franchise offering circular.  It is one of those franchise agreements that can clear up any deep dark mysteries that may be lingering in your head about buying that franchise. The franchise offering circular will spell out in precise language exactly what you can expect from the franchisor. It also lays out in no uncertain terms what is expected of you.

Probably the tidbits of information that can change your life the most in the franchise offering circular are the financial details about the transaction and the cost of running the franchise once the doors are open. This is “need to know” stuff because the franchise offering circular can be used to get financing and to lay out your budget so the bean counters in your company can make sure they have their ducks in a row.

You should be chomping at the bit to get your mitts on that franchise offering circular.  If the franchisor stalls out on providing you with a very detailed franchise offering circular, it is time to look for a better franchisor.  There are twenty one different kinds of disclosures in the franchise offering circular and every one of them is important.

The franchise offering circular is a legal document so don’t be afraid to get your own legal eagles to look at it. But the law requires that the franchise offering circular be written in language that regular human beings can read instead of a bunch of legal mumbo jumbo.  So make sure you get it, know it and love it when the time comes to exchange the franchise offering circular. You will be glad you did.

Uniforn Franchise Offering Circular (UFOC)

FYI – As of now UFOCs may no longer be used for franchise sales anywhere in the U.S. – FDD is the new format.

One of the most difficult steps in setting up a franchise business is the preparation of your franchise documents. There are various documents that each franchisor should have in place before they launch the business officially. Some are documents that are good to be in place since the beginning just to set all aspects of the business in a working system. Other documents are required by the Federal Trade Commission and having them ready is obligatory.

One of the most challenging documents in terms of preparation is the so called Uniform Franchise Offering Circular (UFOC), most popular as franchise disclosure document. The UFOC must be prepared in advance and audited by an independent audit company. Only then the franchisor can go ahead and register their franchise business in the states where filling is required.

In most of the cases some professional help is required when getting a UFOC ready. Whether or not you will use the services of a franchise consultant or a franchise attorney, it is good to have at least a basic idea how to write your company’s UFOC and what information should be included in it.

Uniform Franchise Offering Circular (UFOC) Key Points

• The cover page. The cover page must be prepared according to the Federal Trade Commission Franchise Rule. It must contain the name of the franchisor, the type of the business organization, principal business contact information, a sample of the primary business trademark and some prescribed statements. There must be a reference to ite5 and item 7 as well.
• The Table of Contents. A UFOC Table of Contents must refer to all items included in the UFOC, and each one should be marked with a number. All exhibits are marked with letters.
• UFOC items. Each part of the disclosure document constitutes a separate item. There are 23 items in a UFOC. For example Item 5 and Item 6 disclose information about fees, Item 7 – initial franchise investment, Item 9 states what franchisee obligations are, Item 11 provides information about the franchisor’s assistance available to franchisees, Item 13 discloses information about trademarks, Item 17 is about termination and renewal terms, Item 21 discloses franchisor’s financial statements and so on. There are specific requirements about how each part must be structured and what information should be included.
• Item 21 – franchisor financial statement. Preparing the Financial Statement is one of the most challenging tasks. It must include copies of the franchisor’s financial statements for the last three years and these statements must be audited by a third party according to the generally accepted accounting principals (GAAP). The aim is to provide prospective franchisees with more information about the franchisor financial situation. While gathering the required information is usually not a big problem, getting it audit may turn into one. Franchisors should make arrangements way in advance as late audits are the most common reason for delays. Keep in mind that the GAAP may be changed or revised and this is why you may be need to seek the advice of an experiences franchise consultant who can help you getting this part of the UFOC ready.

Franchise Offering Document System

So you have sold your first franchise and are hungry to sell more. Better slow down, this is the number one fault of most franchisors is to start taking on more franchisees than they can handle. You need to ensure a controlled growth and only take on those franchisees that are a definite fit rather than the one who can simply afford the fees.

Now, getting all of this down on paper is the other portion of the business some don’t recognize. Like most things, the excitement is 5% of the sale, the other 95% is the paperwork involved. A Franchise Document System, or a Franchise Operations Manual, is easy enough to create and consists primarily of an exhaustive index of material numbered to what each form, policy or contract does. A franchise system may have more than a dozen policies, a dozen or more forms and quite a few booklets on how everything should be run. Take a look at our Operations Manual for an example of a professionally made franchise document system.

Simplify your forms and policies by giving each of them a number. You can start with the employee policies labeling them as such: EMP-1001 – So this would be Employee Form 1001 – Vacation Request Form
Having all of this in order save a lot of time, especially when a franchisee requests this form if they have lost it or need more copies. These forms, policies, procedures and contracts should also be date stamped so you know the last time they were edited.

Now that you have your paperwork in order, your franchise locations will be setup in accordance with the forms they need. There may be some states that only allow certain stipulations in contracts and you may only have a handful or more franchisees in that state. The simplicity of a Document System will ensure that all of your paperwork is in pristine order and can be called upon with the click of a mouse.