Franchising Laws

Because buying a franchise is an important legal process, you need to make sure that you understand the Franchising Law and that you can commit to certain obligations. This is something that happens not only to potential buyers, but also to franchisors. Both parties need to understand exactly how the process works.

The Uniform Franchise Offer Circular, also known as the UFOC, is a document that contains valuable information about franchises, and the relationship between franchisor and franchisee. This document was first recognized by the U.S. in 1993, and again by the Federal Trade Commission in 1995. The UFOC is used in a few states which don’t accept the Franchise Rule. Basically, the Uniform Franchise Offer Circular is more complicated and has stricter rules, which can sometimes be more suitable. If you live in a state that requires a UFOC, your franchisor will have the legal duty of giving you certain information. They have to tell you exactly how many years of experience they have, if they were involved in a lawsuit regarding the franchise, what your obligations are as a franchisee, earning claims, what their obligations are in the process, and a few other facts about the franchise.

The Franchise Rule only has a few requirements, but it still remains mandatory and a good tool for both franchisors and franchisees. With a legal document that contains everything there is to know about the franchise, there won’t be any problems in the future and everyone will know what to expect from the business. Some states require you to use the UFOC, and others require the Franchise Rule. Either way, you will end up with a successful business.