A franchise or business opportunity seller must give the prospective buyer a detailed disclosure document at least ten (10) business days before the buyer pays any money or legally commit himself to a purchase. The disclosure document includes:
" Names, addresses, and telephone numbers of at least 10 previous purchasers who live closest to the buyer; " A fully audited financial statement of the seller; " Background and experience of the business's key executives; " Cost of starting and maintaining the business; and " The responsibilities buyer and the seller will have to each other once the buyer has invested in the opportunity.
Franchise sellers also must tell a prospective buyer in writing the number and percentage of owners who have failed.
Houston Texas is a vibrant city located in the southeastern part of Texas, known for its rich cultural diversity, robust economy, and bustling urban atmosphere. When considering franchising opportunities in Houston, it is essential for franchisors to adhere to the guidelines set forth by the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule. This rule mandates disclosure of specific matters to prospective franchisees, ensuring transparency and protection. Here is a detailed checklist of matters that must be disclosed: 1. Franchisor Information: Franchisors must provide their full legal name, business address, contact information, and any parent companies or affiliates involved in the franchise arrangement. 2. Franchise Fee and Other Payments: The franchisor must disclose the total initial franchise fee, any ongoing fees or royalties, and payment schedules associated with the franchise opportunity. 3. Initial Investment: A detailed breakdown of the estimated initial investment is required, encompassing costs such as equipment, inventory, leasehold improvements, and working capital. 4. Financing Arrangements: If the franchisor offers financing options, they must disclose the terms, interest rates, collateral required, and any personal guarantees. 5. Franchisee Obligations: The prospective franchisee must be informed of their obligations, including the nature of their involvement in the business, any required participation in daily operations, and ongoing training and support. 6. Territory and Exclusivity: The franchisor should specify whether an exclusive territory will be granted and the terms and conditions associated with it. 7. Trademarks and Intellectual Property: Details regarding the use of trademarks, patents, copyrights, and any restrictions on their usage should be included. 8. Litigation History: Franchisors must disclose if they have been involved in any previous litigation, including any pending lawsuits or settlements related to the franchise business. 9. Franchisee's Obligation upon Termination/Transfer: The prospective franchisee must be aware of the franchisor's policies regarding termination, transfer, or resale of the franchise, including any associated fees or approval processes. 10. Financial Performance Representations: If the franchisor makes any claims about the potential financial performance of the franchise, they must provide supporting data and disclose any material assumptions used in those calculations. By adhering to this checklist, franchisors can fulfill their obligations under the FTC Franchise and Business Opportunity Rule and provide prospective franchisees in Houston, Texas, with the necessary information for making informed decisions.Houston Texas is a vibrant city located in the southeastern part of Texas, known for its rich cultural diversity, robust economy, and bustling urban atmosphere. When considering franchising opportunities in Houston, it is essential for franchisors to adhere to the guidelines set forth by the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule. This rule mandates disclosure of specific matters to prospective franchisees, ensuring transparency and protection. Here is a detailed checklist of matters that must be disclosed: 1. Franchisor Information: Franchisors must provide their full legal name, business address, contact information, and any parent companies or affiliates involved in the franchise arrangement. 2. Franchise Fee and Other Payments: The franchisor must disclose the total initial franchise fee, any ongoing fees or royalties, and payment schedules associated with the franchise opportunity. 3. Initial Investment: A detailed breakdown of the estimated initial investment is required, encompassing costs such as equipment, inventory, leasehold improvements, and working capital. 4. Financing Arrangements: If the franchisor offers financing options, they must disclose the terms, interest rates, collateral required, and any personal guarantees. 5. Franchisee Obligations: The prospective franchisee must be informed of their obligations, including the nature of their involvement in the business, any required participation in daily operations, and ongoing training and support. 6. Territory and Exclusivity: The franchisor should specify whether an exclusive territory will be granted and the terms and conditions associated with it. 7. Trademarks and Intellectual Property: Details regarding the use of trademarks, patents, copyrights, and any restrictions on their usage should be included. 8. Litigation History: Franchisors must disclose if they have been involved in any previous litigation, including any pending lawsuits or settlements related to the franchise business. 9. Franchisee's Obligation upon Termination/Transfer: The prospective franchisee must be aware of the franchisor's policies regarding termination, transfer, or resale of the franchise, including any associated fees or approval processes. 10. Financial Performance Representations: If the franchisor makes any claims about the potential financial performance of the franchise, they must provide supporting data and disclose any material assumptions used in those calculations. By adhering to this checklist, franchisors can fulfill their obligations under the FTC Franchise and Business Opportunity Rule and provide prospective franchisees in Houston, Texas, with the necessary information for making informed decisions.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
