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.
Utah Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule is an important document that outlines the necessary information that franchisors need to disclose to potential franchisees. This checklist, complying with the FTC Franchise and Business Opportunity Rule, ensures transparency and helps prospective franchisees make informed decisions. Here are some key points that should be included in the checklist: 1. Franchisor Information: The checklist should provide detailed information about the franchisor, including their legal name, address, contact details, and business experience. It should also mention if the franchisor operates under different names. 2. Litigation History: Any past or ongoing litigation involving the franchisor or its key personnel must be disclosed. This includes any bankruptcies, felony convictions, or civil actions related to fraud, misrepresentation, or violation of franchise laws. 3. Initial Investment Costs: A breakdown of the initial investment required to establish the franchise should be included. This should cover the franchise fee, equipment costs, real estate expenses, any required inventory, and other relevant fees. 4. Ongoing Costs and Restrictions: The checklist must contain a comprehensive list of ongoing costs and fees that franchisees will be responsible for, such as royalties, advertising fees, and technology support. It should also mention any restrictions on suppliers, services, or pricing that may impact the franchisee's operations. 5. Franchisee Training and Support: Details regarding the training and ongoing support provided by the franchisor should be disclosed. This includes the duration and location of training programs, availability of field support, and assistance with marketing and advertising. 6. Territory and Competition: The checklist should outline the territory or exclusive rights awarded to the franchisee and any restrictions related to the location or expansion of the business. It should also disclose any existing or potential competition in the area. 7. Intellectual Property Rights: Franchisees must be informed about the usage and protection of trademarks, patents, copyrights, and proprietary information. This includes guidance on how to properly use and display these assets. 8. Renewal and Termination Terms: The checklist should explain the criteria and process for renewing the franchise agreement, as well as the circumstances under which the agreement can be terminated by either party. It should also mention the obligations of the franchisor upon termination. It's important to note that this checklist may vary slightly based on individual state regulations or additional requirements imposed by the FTC Franchise and Business Opportunity Rule. Franchisors in Utah should review the specific state laws and consult legal professionals to ensure compliance.Utah Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule is an important document that outlines the necessary information that franchisors need to disclose to potential franchisees. This checklist, complying with the FTC Franchise and Business Opportunity Rule, ensures transparency and helps prospective franchisees make informed decisions. Here are some key points that should be included in the checklist: 1. Franchisor Information: The checklist should provide detailed information about the franchisor, including their legal name, address, contact details, and business experience. It should also mention if the franchisor operates under different names. 2. Litigation History: Any past or ongoing litigation involving the franchisor or its key personnel must be disclosed. This includes any bankruptcies, felony convictions, or civil actions related to fraud, misrepresentation, or violation of franchise laws. 3. Initial Investment Costs: A breakdown of the initial investment required to establish the franchise should be included. This should cover the franchise fee, equipment costs, real estate expenses, any required inventory, and other relevant fees. 4. Ongoing Costs and Restrictions: The checklist must contain a comprehensive list of ongoing costs and fees that franchisees will be responsible for, such as royalties, advertising fees, and technology support. It should also mention any restrictions on suppliers, services, or pricing that may impact the franchisee's operations. 5. Franchisee Training and Support: Details regarding the training and ongoing support provided by the franchisor should be disclosed. This includes the duration and location of training programs, availability of field support, and assistance with marketing and advertising. 6. Territory and Competition: The checklist should outline the territory or exclusive rights awarded to the franchisee and any restrictions related to the location or expansion of the business. It should also disclose any existing or potential competition in the area. 7. Intellectual Property Rights: Franchisees must be informed about the usage and protection of trademarks, patents, copyrights, and proprietary information. This includes guidance on how to properly use and display these assets. 8. Renewal and Termination Terms: The checklist should explain the criteria and process for renewing the franchise agreement, as well as the circumstances under which the agreement can be terminated by either party. It should also mention the obligations of the franchisor upon termination. It's important to note that this checklist may vary slightly based on individual state regulations or additional requirements imposed by the FTC Franchise and Business Opportunity Rule. Franchisors in Utah should review the specific state laws and consult legal professionals to ensure compliance.
