The Franchisors UFOC [Uniform Franchise Offering Circular]

The Uniform Franchise Offering Circular [UFOC] is the most important document a franchisor can offer to the franchisee. This provides the aspiring franchisees with all the important information which they need before they make the final decision of investing in a franchise. It should contain a plethora of information ranging from the time of inception of business to the terms of termination & renewal. Franchisees often rush into making decisions because of lack of accurate information. Therefore in order to make the right choice, the franchisors UFOC is very important.

Here are some of the key points, which should definitely be mentioned in the UFOC

• History of the Franchise It should clearly mention the history of the franchisors business since its inception. This would also involve legal details, if any. This should be like an exhaustive description of the company since its beginning with respect to market share, customer satisfaction, profit margins, taxation etc.

• Fees It should also clearly state the various types of fees which have to be paid by the franchisee. Many franchisors nowadays take an incremental fee, which means, greater the sales, greater the fee/ commission paid by the franchisee. Hence the royalty as well as the daily fee should be clearly stated.

• Initial Investment This is also known as the franchise fee. This is the initial fee paid by an aspiring franchisee to be a part of the franchisor business. The initial fee is used by the franchisor to invest money in the franchise and also in training and hiring franchisee staff and for other such services. The fee varies from franchisor to franchisor.

• Rights and duties It should also state the rights and duties of both the franchisor as well as the franchisee. This would help avoid confusion in the future. Also in times of dispute, this section is the one most often referred to.

• Terms of Contract It should also clearly mentions all the terms of the franchise contract like the duration, termination clause, renewal conditions and its fess. It should also mention whether the franchisee gets exclusive rights over his territory or not. It should mention the compensation to be provided in case this right is violated.

• Use of Intellectual Property It should also mention the terms of use of the intellectual property of the franchisor. The do's and don’t's of using the franchisors Intellectual Property should be clearly stated.

• Financial position It should have an accurate financial report of the company.

• List of Franchisees It should have a list of all the existing franchisees and also their contact details.