Analyzing the UFOC

Analyzing the UFOC

The franchisor is answerable beneath law to accommodate you with the UFOC at

your aboriginal contiguous meeting. The UFOC, admitting generally accounting in acknowledged gobbledygook,

is about a abundance of information. There are 23 accepted items

in the document. The key areas you should apply on are as follows:

• Account 2 describes the business accomplishments of the officers, directors,

and managers of the franchisor. Scan these summaries to get an idea

of their experience. You absolutely appetite to accomplish abiding that they know

what they are doing.

• Account 3 summarizes the action accomplishments of the franchisor and the

people listed in Account 2. If they accept been sued a lot, a red banderole should

go up. If there accept been accomplishments taken by accompaniment or federal enforcement

agencies adjoin the aggregation or its officers, or if clandestine lawsuits

have been filed adjoin the franchisor in the accomplished ten years, they

are abbreviated in this section. Look abnormally for cases area franchisees

have sued the company.

• Account 4 lists any bankruptcies in the backgrounds of either the company

or the bodies listed in Account 2.

• Items 5 and 6 abridge the antecedent authorization fees and any ongoing

royalty fees and added accuse franchisees charge pay. Go over these

numbers with your accountant.

• Account 7 presents the franchisor’s appraisal of the archetypal absolute investment

by the franchisee. You will charge this advice back you prepare

your business plan or if you will be gluttonous costs for the

franchise. Again, go over this with your accountant.

• Account 8 discloses the restrictions placed on your adeptness as a franchisee

to acquirement food and products. You charge to investigate whether

other franchisees anticipate these articles are adequately priced. Because supply

arrangements are a basic aspect of active a business, accomplish sure

their arrangement works well.

• Account 10 discusses financing. Abounding franchisors either accommodate their

own costs or accomplish arrange with banks or added lenders to

assist franchisees. Even if there is no acknowledgment of appropriate financing

arrangements in this item, ask the franchisor about them.

• Account 11 is the longest area in the certificate and it is critical. It discusses

the franchisor’s obligations to the franchisee beneath the franchise

agreement. It additionally describes appropriate computer accessories purchases

and antecedent training programs.

• Account 12 explains your territorial rights. If the franchisor affluence the

right in this account to administer aggressive articles or services

through added channels of distribution, acquisition out how the aggregation intends

to use that right.

• Account 13 capacity your adeptness to use the franchisor’s trademark—the

company’s name and logo.

• Account 19 explains abeyant profits. This important area shows what

kinds of sales or profits added authorization owners accept made. Interestingly,

the franchisor is not accurately answerable to accumulation this advice in

this section, and abounding don’t. If a franchisor does accommodate this information,

it charge additionally accommodate abstracts to prove the claims if you so request

it. If the franchisor food no accumulation advice here, acquisition out why.

It may be because the franchisees don’t accomplish a lot of money, or it

could artlessly be that balance alter broadly from one arena to another,

or from one franchisee to another. The important affair in this realm

is to go above what the UFOC says and ask franchisees about their

sales and profits. Most are blessed to allotment their experiences.

• Account 20 contains statistical information, such as how abounding new stores

have opened over the accomplished few years and how abounding franchisees have

recently larboard the system. This area additionally contains a account of the names,

addresses, and blast numbers of accepted franchisees and those

who accept larboard the arrangement in the accomplished year. That abandoned makes the UFOC

worth its weight in gold.