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.
Harris Texas Franchise Disclosure Checklist in Accordance with FTC Franchise and Business Opportunity Rule The Harris Texas Franchise Disclosure Checklist is a comprehensive list that outlines the necessary matters that must be disclosed to prospective franchisees in accordance with the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule. This checklist serves as a crucial tool for franchisors operating in Harris County, Texas, ensuring compliance with legal requirements and empowering prospective franchisees with vital information. Below are the key areas covered in the Harris Texas Franchise Disclosure Checklist: 1. Background Information: — The franchisor's business history, including any litigation or bankruptcy filings. — Key executives and their experience in the industry. — The franchisor's parent and affiliate companies, if applicable. 2. Franchise Costs: — Initial franchise fee breakdown— - Any ongoing royalties or percentage-based fees. — Estimate of the total investment required. — Explanation of any recurring or ad-hoc fees (e.g., advertising fund contributions). — Inventory, equipment, and supply costs. — Real estate and leasehold improvement expenses, if relevant. 3. Franchisee Obligations: — General obligations and responsibilities of the franchisee. — Minimum and recommended level of inventory or supplies. — Compliance with the franchisor's standards and operating procedures. — Advertising and promotional requirements. — Non-compete and exclusivity agreements, if applicable. 4. Territory Rights and Restrictions: — Description of the territory granted to the franchisee. — Any territorial restrictions or limitations. — Potential for exclusivity or protected market areas. — Rights to expand or open additional franchise locations. 5. Training and Support: — Detailed outline of training programs provided by the franchisor. — Duration, location, and costs associated with the training. — Ongoing support and assistance available to franchisees. — Marketing and advertising support offered by the franchisor. 6. Financial Performance Representations: — If applicable, information on the franchisor's past financial performance or that of its franchisees. — Any relevant earnings claims, projections, or historical financial data. — Explanation of assumptions and factors influencing financial performance. 7. Franchise Agreement and Terms: — Overview of the franchise agreement's key terms and conditions. — Duration of the franchise agreement and options for renewal. — Termination and transfer rights— - Dispute resolution procedures and applicable laws. It is crucial for franchisors to carefully review and complete the Harris Texas Franchise Disclosure Checklist to ensure compliance with the FTC Franchise and Business Opportunity Rule. This checklist helps foster transparency and enables prospective franchisees to make informed decisions about investing in a franchise opportunity.Harris Texas Franchise Disclosure Checklist in Accordance with FTC Franchise and Business Opportunity Rule The Harris Texas Franchise Disclosure Checklist is a comprehensive list that outlines the necessary matters that must be disclosed to prospective franchisees in accordance with the Federal Trade Commission (FTC) Franchise and Business Opportunity Rule. This checklist serves as a crucial tool for franchisors operating in Harris County, Texas, ensuring compliance with legal requirements and empowering prospective franchisees with vital information. Below are the key areas covered in the Harris Texas Franchise Disclosure Checklist: 1. Background Information: — The franchisor's business history, including any litigation or bankruptcy filings. — Key executives and their experience in the industry. — The franchisor's parent and affiliate companies, if applicable. 2. Franchise Costs: — Initial franchise fee breakdown— - Any ongoing royalties or percentage-based fees. — Estimate of the total investment required. — Explanation of any recurring or ad-hoc fees (e.g., advertising fund contributions). — Inventory, equipment, and supply costs. — Real estate and leasehold improvement expenses, if relevant. 3. Franchisee Obligations: — General obligations and responsibilities of the franchisee. — Minimum and recommended level of inventory or supplies. — Compliance with the franchisor's standards and operating procedures. — Advertising and promotional requirements. — Non-compete and exclusivity agreements, if applicable. 4. Territory Rights and Restrictions: — Description of the territory granted to the franchisee. — Any territorial restrictions or limitations. — Potential for exclusivity or protected market areas. — Rights to expand or open additional franchise locations. 5. Training and Support: — Detailed outline of training programs provided by the franchisor. — Duration, location, and costs associated with the training. — Ongoing support and assistance available to franchisees. — Marketing and advertising support offered by the franchisor. 6. Financial Performance Representations: — If applicable, information on the franchisor's past financial performance or that of its franchisees. — Any relevant earnings claims, projections, or historical financial data. — Explanation of assumptions and factors influencing financial performance. 7. Franchise Agreement and Terms: — Overview of the franchise agreement's key terms and conditions. — Duration of the franchise agreement and options for renewal. — Termination and transfer rights— - Dispute resolution procedures and applicable laws. It is crucial for franchisors to carefully review and complete the Harris Texas Franchise Disclosure Checklist to ensure compliance with the FTC Franchise and Business Opportunity Rule. This checklist helps foster transparency and enables prospective franchisees to make informed decisions about investing in a franchise opportunity.
