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: San Antonio, Texas Checklist for FTC Franchise and Business Opportunity Rule Disclosure to Prospective Franchisees Introduction: When considering a franchise opportunity in San Antonio, Texas, it is crucial for prospective franchisees to be aware of the necessary disclosure requirements mandated by the Federal Trade Commission's (FTC) Franchise and Business Opportunity Rule. This comprehensive checklist outlines the specific matters that franchisors must disclose to prospective franchisees according to the FTC rules, ensuring transparency and informed decision-making. Let's delve into the key aspects of the checklist that must be addressed: 1. Franchise Overview: Provide a detailed description of the franchise opportunity, including the brand name, products or services offered, and the overall business concept. Highlight any unique selling propositions, competitive advantages, or patents owned by the franchisor. 2. Business Experience of Franchisor: Disclose the background and experience of the franchisor, such as the number of years in operation, key personnel, and any previous bankruptcy or litigation history. This information provides insights into the franchisor's credibility and industry expertise. 3. Initial Investment and Additional Fees: Disclose all costs associated with starting the franchise, including but not limited to the initial franchise fee, equipment costs, leasehold improvements, inventory, and working capital requirements. Additionally, outline ongoing fees like royalties, advertising contributions, and any other fees payable to the franchisor. 4. Training and Support: Detail the training programs provided by the franchisor, including the duration, location, and content. Specify the ongoing support (marketing, operations, etc.) offered to franchisees and any associated fees. 5. Territory and Competition: Explain whether exclusive territories exist and the criteria for their allocation. Identify any potential competitive limitations, such as the franchisor's right to operate or grant licenses for similar businesses within the defined territory. 6. Intellectual Property: Disclose information regarding trademarks, copyrights, or patents owned by the franchisor, along with any restrictions or limitations on their usage. Clarify if franchisees are granted any intellectual property rights during the franchise term. 7. Financial Performance Representations: Indicate whether the franchisor provides financial performance representations (such as sales figures, profits, or expenses estimates) and, if available, the specific documents or sources of such representations. Note that providing these representations is optional but subject to additional FTC guidelines. 8. Renewal, Termination, and Transfer: Specify the conditions, terms, and notice periods for renewal, termination, or transfer of the franchise agreement. Outline any associated costs or penalties involved in such events. 9. Litigation and Bankruptcy: Disclose any history of litigation involving the franchisor or its key personnel, highlighting pending lawsuits, settled claims, or bankruptcy filings. This information helps prospective franchisees evaluate potential risks and liabilities. 10. Public Figures and Endorsements: Inform prospects about the use of public figures or celebrities in franchise advertising campaigns and clarify if they have a direct or indirect financial interest in the franchise. Conclusion: The San Antonio, Texas Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule serves as a vital tool for aspiring franchisees to assess the viability and transparency of a franchise opportunity. By ensuring all these key aspects are properly disclosed, franchisees can make well-informed decisions, minimizing potential risks and maximizing their chances for success.Title: San Antonio, Texas Checklist for FTC Franchise and Business Opportunity Rule Disclosure to Prospective Franchisees Introduction: When considering a franchise opportunity in San Antonio, Texas, it is crucial for prospective franchisees to be aware of the necessary disclosure requirements mandated by the Federal Trade Commission's (FTC) Franchise and Business Opportunity Rule. This comprehensive checklist outlines the specific matters that franchisors must disclose to prospective franchisees according to the FTC rules, ensuring transparency and informed decision-making. Let's delve into the key aspects of the checklist that must be addressed: 1. Franchise Overview: Provide a detailed description of the franchise opportunity, including the brand name, products or services offered, and the overall business concept. Highlight any unique selling propositions, competitive advantages, or patents owned by the franchisor. 2. Business Experience of Franchisor: Disclose the background and experience of the franchisor, such as the number of years in operation, key personnel, and any previous bankruptcy or litigation history. This information provides insights into the franchisor's credibility and industry expertise. 3. Initial Investment and Additional Fees: Disclose all costs associated with starting the franchise, including but not limited to the initial franchise fee, equipment costs, leasehold improvements, inventory, and working capital requirements. Additionally, outline ongoing fees like royalties, advertising contributions, and any other fees payable to the franchisor. 4. Training and Support: Detail the training programs provided by the franchisor, including the duration, location, and content. Specify the ongoing support (marketing, operations, etc.) offered to franchisees and any associated fees. 5. Territory and Competition: Explain whether exclusive territories exist and the criteria for their allocation. Identify any potential competitive limitations, such as the franchisor's right to operate or grant licenses for similar businesses within the defined territory. 6. Intellectual Property: Disclose information regarding trademarks, copyrights, or patents owned by the franchisor, along with any restrictions or limitations on their usage. Clarify if franchisees are granted any intellectual property rights during the franchise term. 7. Financial Performance Representations: Indicate whether the franchisor provides financial performance representations (such as sales figures, profits, or expenses estimates) and, if available, the specific documents or sources of such representations. Note that providing these representations is optional but subject to additional FTC guidelines. 8. Renewal, Termination, and Transfer: Specify the conditions, terms, and notice periods for renewal, termination, or transfer of the franchise agreement. Outline any associated costs or penalties involved in such events. 9. Litigation and Bankruptcy: Disclose any history of litigation involving the franchisor or its key personnel, highlighting pending lawsuits, settled claims, or bankruptcy filings. This information helps prospective franchisees evaluate potential risks and liabilities. 10. Public Figures and Endorsements: Inform prospects about the use of public figures or celebrities in franchise advertising campaigns and clarify if they have a direct or indirect financial interest in the franchise. Conclusion: The San Antonio, Texas Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule serves as a vital tool for aspiring franchisees to assess the viability and transparency of a franchise opportunity. By ensuring all these key aspects are properly disclosed, franchisees can make well-informed decisions, minimizing potential risks and maximizing their chances for success.
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.
