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.
The Wisconsin Department of Financial Institutions (DFI) requires franchisors to provide prospective franchisees with a comprehensive disclosure document known as the Wisconsin Checklist Regarding Matters that must be Disclosed to Prospective Franchisee. This checklist is intended to comply with the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule, ensuring transparency in franchise transactions. Several key matters must be disclosed to prospective franchisees in Wisconsin, as outlined in the checklist: 1. Business background: Franchisors must provide their business history, including any predecessors or affiliates, details on bankruptcy or litigation, and the experience of their key personnel. 2. Litigation history: Any past or present litigation involving the franchisor or its key personnel, including disputes with franchisees, must be disclosed. 3. Bankruptcy history: If the franchisor or any of its key personnel have filed for bankruptcy in the past, details of these proceedings must be provided. 4. Franchise costs and fees: Detailed information regarding all initial and recurring fees, deposits, and other financial obligations required from the franchisee must be disclosed, including estimates of the total investment needed to establish and operate the franchise. 5. Franchisee obligations and restrictions: The franchisor should list all significant obligations and restrictions imposed on franchisees, such as hours of operation, employee training requirements, and any limitations on product or service offerings. 6. Territory and exclusivity: The extent of territorial rights granted to the franchisee and whether exclusivity is provided within the territory should be specified. 7. Intellectual property: The franchisor must disclose the nature and extent of the intellectual property, trademarks, copyrights, or patents licensed to the franchisee, along with any limitations or conditions related to their use. 8. Renewal, termination, and transfer: Details on franchise agreement renewal, termination conditions, and any transferability limitations should be clearly outlined to allow prospective franchisees to assess their long-term prospects. 9. Financial statements: The franchisor must provide its audited financial statements for the past three years or disclose if these documents are unavailable. 10. References: Franchisors are required to provide a list of current and former franchisees, allowing potential franchisees to contact them for additional information and insights. Different types of Wisconsin Checklists may exist, focusing on specific industries or franchise types (e.g., fast food, retail, home services). However, the key matters to be disclosed in accordance with FTC Franchise and Business Opportunity Rule generally remain the same, as outlined above.The Wisconsin Department of Financial Institutions (DFI) requires franchisors to provide prospective franchisees with a comprehensive disclosure document known as the Wisconsin Checklist Regarding Matters that must be Disclosed to Prospective Franchisee. This checklist is intended to comply with the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule, ensuring transparency in franchise transactions. Several key matters must be disclosed to prospective franchisees in Wisconsin, as outlined in the checklist: 1. Business background: Franchisors must provide their business history, including any predecessors or affiliates, details on bankruptcy or litigation, and the experience of their key personnel. 2. Litigation history: Any past or present litigation involving the franchisor or its key personnel, including disputes with franchisees, must be disclosed. 3. Bankruptcy history: If the franchisor or any of its key personnel have filed for bankruptcy in the past, details of these proceedings must be provided. 4. Franchise costs and fees: Detailed information regarding all initial and recurring fees, deposits, and other financial obligations required from the franchisee must be disclosed, including estimates of the total investment needed to establish and operate the franchise. 5. Franchisee obligations and restrictions: The franchisor should list all significant obligations and restrictions imposed on franchisees, such as hours of operation, employee training requirements, and any limitations on product or service offerings. 6. Territory and exclusivity: The extent of territorial rights granted to the franchisee and whether exclusivity is provided within the territory should be specified. 7. Intellectual property: The franchisor must disclose the nature and extent of the intellectual property, trademarks, copyrights, or patents licensed to the franchisee, along with any limitations or conditions related to their use. 8. Renewal, termination, and transfer: Details on franchise agreement renewal, termination conditions, and any transferability limitations should be clearly outlined to allow prospective franchisees to assess their long-term prospects. 9. Financial statements: The franchisor must provide its audited financial statements for the past three years or disclose if these documents are unavailable. 10. References: Franchisors are required to provide a list of current and former franchisees, allowing potential franchisees to contact them for additional information and insights. Different types of Wisconsin Checklists may exist, focusing on specific industries or franchise types (e.g., fast food, retail, home services). However, the key matters to be disclosed in accordance with FTC Franchise and Business Opportunity Rule generally remain the same, as outlined above.
