Figuring Out The Terms Of Your Franchise

To understand the terms of your New York franchise arrangement, you will have to understand your Uniform Franchise Offering Circular (UFOC). The UFOC will contain important information about the terms of your New York franchise, such as the franchisor's history, your own obligations, and your initial investment fees.

Nowadays, the UFOC is referred to as the Franchise Disclosure Document (FDD). If you are planning to buy a New York franchise, you should have a New York franchise lawyer review your FDD. A New York franchise lawyer can help you review the terms of your franchise.

The Franchise Disclosure Document

According to federal law, an FDD must be provided by a business franchisor before signing a franchise agreement. It must include specific disclosures, which will help you decide whether to invest in the New York franchise. Some of the significant disclosures in the FDD include:

1. The Franchisor's Business Experience - a specific history of the company's officers, board members, management, and executives.

2. Litigation History - the franchisor must disclose whether it, its predecessors, or any of its affiliates have been involved in litigation.

3. Bankruptcy History

4. Your Fees - a summary of your initial fees as a new franchisee. This will include an ongoing royalty fee, as well as advertising and construction costs.

5. Your Obligations - a list of your obligations as a franchisee, such as the selection and acquisition of your site, mandatory training, your franchise fees, sales responsibilities, and standards you must obey.

6. The Franchisor's Obligations - an outline of the franchisor's obligations, including assistance with the location of a site; the hiring and training of employees; the supply of products and services; and information about the franchisor's advertising program.

7. Your Territory - your territorial rights under the franchise agreement.

8. Trademark Information - information about the company's trademarks, and which trademarks you will be required to use.

9. Restrictions on What You May Sell - information about the products and/or services that you are required to sell, and what you are restricted from selling.

Finally, the FDD will include financial statements from the franchisor, with a balance sheet from the company's most recent fiscal year.

Understanding the FDD

In short, the FDD is a long list of business disclosures, which you must review and understand. This provides the terms, obligations, and necessary information for your franchise in New York. A New York franchise lawyer can help you understand your franchise terms. If you are a franchisor, you are obligated to provide these terms to all franchisees in clear and complete terms, in accordance with established business regulations.