Wayne Michigan Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule

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Wayne
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US-02909BG
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Description

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.

How to fill out Wayne Michigan Checklist Regarding Matters That Must Be Disclosed To Prospective Franchisee In Accordance With FTC Franchise And Business Opportunity Rule?

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FAQ

A Franchise Disclosure Document includes 23 specific pieces of information (called items), the franchisors franchise agreement, and various exhibits (like a list of current and past franchisees, and audit financials of the franchisor.

The Disclosure Document can be described as a document which summarises information regarding the Franchise and its system, and sets out for example, details of the Franchisor, details of the existing Franchise network, and what fees will be payable under the Franchise.

The franchise fee usually covers the cost of training (not including travel expenses), plus support and site selection. The items or benefits that are included in a franchise fee are different for every company. In some cases, the franchise fee is just an upfront licensing fee for the right to use the franchise name.

The typical duration of a franchise agreement is usually 10 or 20 years. This part of the contract will also spell out the conditions under which the franchise can be sold to someone else, which can be stringent to make sure that any future franchisee is qualified to be an owner.

The three types of franchise agreements include: Master Franchise Agreement. Area Representative. Area Development Agreement.

The Rule requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees.

You should also look for any red flags a disclosure document may reveal about the franchisor or franchise system, including: Current or recent litigation: The franchisor must list any legal proceedings which relate to it or an associate (for example, the franchise's holding company).

In short, a business arrangement meets the FTC Rule definition of a franchise if the business arrangement involves: (i) the grant of a trademark, (ii) the franchisor exerts or has the authority to exert significant control or assistance over the operation of the business, and (iii) the franchisee pays the franchisor or

The Franchise Agreement Location/territory.Operations.Training and ongoing support.Duration.Franchise fee/investment.Royalties/ongoing fees.Trademark/patent/signage.Advertising/marketing.

The FDD outlines comprehensive information about the roles of both parties involved in the franchisethe franchisor and the franchiseeand is designed to enable the potential franchisee to make an honest and informed decision about their investment into the business.

More info

C. The Proposed Uniform Act and the Potential Amendment of the. FRANCHISE DISCLOSURE DOCUMENT.You will operate a Hilton hotel under a Franchise Agreement with us. WAXING THE CITY® business in my area? US BY ARBITRATION AND LITIGATION ONLY IN OHIO. OUT-OF-STATE. Franchise opportunity. Additionally, the FTC Rule requires neither the failure rate of franchises nor the income statements of franchisees to be disclosed. 2 12 Federal Trade Commission Rule on Disclosure Requirements and Prohibitions Concerning Franchising and Business. Opportunity Ventures (FTC Rule) §436.

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Wayne Michigan Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule