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.
Title: Phoenix, Arizona Franchise Disclosure Checklist in Accordance with FTC Franchise and Business Opportunity Rule Introduction: Franchising in Phoenix, Arizona offers promising opportunities for entrepreneurs looking to establish their business ventures successfully. However, before entering into a franchise agreement, it is crucial for franchisors to disclose necessary information to prospective franchisees. In compliance with the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule, the following checklist outlines the key matters that must be disclosed to a prospective franchisee in Phoenix, Arizona. 1. Franchise Costs: — Initial investment: Clearly state the estimated costs required to establish the franchise, including expenses related to equipment, inventory, leasehold improvements, initial advertising, and training. — Ongoing fees: Detail the ongoing fees, such as royalties, marketing contributions, or other recurring payments, providing the specifics of the calculation and payment schedule. — Additional costs: Disclose any additional costs that a franchisee might incur beyond the initial investment, such as equipment maintenance, insurance, or any future upgrades. 2. Franchise Territory: — Exclusive territory: Specify if a franchisee will have an exclusive territory, ensuring it is defined and clearly understandable. — Competition within territory: Disclose whether other franchisees or company-owned units are already or will be operating within the franchisee's designated territory. — Territory restrictions: Highlight any limitations or restrictions on a franchisee's ability to conduct business outside their designated territory. 3. Franchise Terms and Renewal: — Initial term: Clearly define the length of the initial franchise term, including the start and end dates. — Renewal rights: Disclose any terms outlining the franchisee's right to renew the agreement, along with any conditions, fees, or limitations on renewal. — Termination and defaults: Describe the circumstances under which the franchisor or franchisee may terminate the agreement and any potential consequences of default. 4. Franchisor's Obligations: — Training and support: Outline the extent and nature of the training and ongoing support the franchisor provides, covering pre-opening, operations, marketing, and other key areas. — Advertising and marketing: Specify the franchisee's contribution requirements to national or regional advertising funds, as well as any local advertising obligations. Detail any limitations or control the franchisor has over the franchisee's marketing activities. 5. Financial Performance Representation: — Earnings claims: Indicate whether the franchisor makes earnings claims and disclose the basis and substantiation behind such claims if applicable. — Historical financial data: If available, provide historical financial statements of existing franchisees, including average revenues, operating expenses, and profitability. 6. Franchisee's Obligations: — System standards and operations: Clarify the franchisee's obligations regarding the operations, staffing, quality standards, customer service, and compliance with the franchisor's system. 7. Intellectual Property and Confidentiality: — Trademarks and copyrights: Identify the trademarks, service marks, trade names, logos, and any associated intellectual property rights licensed to the franchisee. — Confidentiality and non-disclosure: Disclose any requirements regarding the protection of the franchisor's trade secrets, confidential information, and proprietary methods. Conclusion: Prospective franchisees in Phoenix, Arizona must receive complete and accurate disclosure regarding various aspects of the franchise opportunity in accordance with the FTC Franchise and Business Opportunity Rule. By following this comprehensive checklist, franchisors can ensure transparency and provide essential information for potential franchisees, allowing them to make informed decisions when considering franchise opportunities in Phoenix, Arizona.Title: Phoenix, Arizona Franchise Disclosure Checklist in Accordance with FTC Franchise and Business Opportunity Rule Introduction: Franchising in Phoenix, Arizona offers promising opportunities for entrepreneurs looking to establish their business ventures successfully. However, before entering into a franchise agreement, it is crucial for franchisors to disclose necessary information to prospective franchisees. In compliance with the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule, the following checklist outlines the key matters that must be disclosed to a prospective franchisee in Phoenix, Arizona. 1. Franchise Costs: — Initial investment: Clearly state the estimated costs required to establish the franchise, including expenses related to equipment, inventory, leasehold improvements, initial advertising, and training. — Ongoing fees: Detail the ongoing fees, such as royalties, marketing contributions, or other recurring payments, providing the specifics of the calculation and payment schedule. — Additional costs: Disclose any additional costs that a franchisee might incur beyond the initial investment, such as equipment maintenance, insurance, or any future upgrades. 2. Franchise Territory: — Exclusive territory: Specify if a franchisee will have an exclusive territory, ensuring it is defined and clearly understandable. — Competition within territory: Disclose whether other franchisees or company-owned units are already or will be operating within the franchisee's designated territory. — Territory restrictions: Highlight any limitations or restrictions on a franchisee's ability to conduct business outside their designated territory. 3. Franchise Terms and Renewal: — Initial term: Clearly define the length of the initial franchise term, including the start and end dates. — Renewal rights: Disclose any terms outlining the franchisee's right to renew the agreement, along with any conditions, fees, or limitations on renewal. — Termination and defaults: Describe the circumstances under which the franchisor or franchisee may terminate the agreement and any potential consequences of default. 4. Franchisor's Obligations: — Training and support: Outline the extent and nature of the training and ongoing support the franchisor provides, covering pre-opening, operations, marketing, and other key areas. — Advertising and marketing: Specify the franchisee's contribution requirements to national or regional advertising funds, as well as any local advertising obligations. Detail any limitations or control the franchisor has over the franchisee's marketing activities. 5. Financial Performance Representation: — Earnings claims: Indicate whether the franchisor makes earnings claims and disclose the basis and substantiation behind such claims if applicable. — Historical financial data: If available, provide historical financial statements of existing franchisees, including average revenues, operating expenses, and profitability. 6. Franchisee's Obligations: — System standards and operations: Clarify the franchisee's obligations regarding the operations, staffing, quality standards, customer service, and compliance with the franchisor's system. 7. Intellectual Property and Confidentiality: — Trademarks and copyrights: Identify the trademarks, service marks, trade names, logos, and any associated intellectual property rights licensed to the franchisee. — Confidentiality and non-disclosure: Disclose any requirements regarding the protection of the franchisor's trade secrets, confidential information, and proprietary methods. Conclusion: Prospective franchisees in Phoenix, Arizona must receive complete and accurate disclosure regarding various aspects of the franchise opportunity in accordance with the FTC Franchise and Business Opportunity Rule. By following this comprehensive checklist, franchisors can ensure transparency and provide essential information for potential franchisees, allowing them to make informed decisions when considering franchise opportunities in Phoenix, Arizona.
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.
