The UFOC

All franchise companies are required to supply their Uniform Franchise Offering Circular (UFOC) to a candidate at least 10 business days before any contract is executed between the parties.

This document contains the good, bad and ugly about the franchisor. Included in it are the exact terms of the Franchise Agreement, company financial history, litigation history and a listing of all current and former franchisees.

The savvy candidate will take this document and read every last word of it. An accountant can help make sense of the financial statements. A lawyer can help make sense of all the legal terminology. A lawyer may wish to alter the Franchise Agreement to be more favorable to their client. Be forewarned, most franchises will not make any changes to their Franchise Agreement.

Often overlooked is the listing of current and former franchisees. The savvy candidate will pick up the phone and contact every one of these people. Here are a some questions that should be asked:

1) Why did you invest in this franchise?
2) What other businesses did you consider?
3) If you had it to do over, would you make the same decision?
4) Are you making the kind of money you expected to make?
5) If you are no longer a franchisee: why/what happened?

Be skeptical. Take your time. Refuse to be rushed. Once you sign the Franchise Agreement, you will be held to its terms and conditions for the entire period and possibly several years beyond.