Franchises/Legal Stuff

Here is some great info on some of the legalities in franchising.
Courtesy of the group I am a member of...Frannet

From FranNet-The Franchise Connection
In both the US and Canada, franchise regulations are in place for the benefit of a person considering the purchase of a franchise. FranNet believes our clients must understand these regulations thoroughly in order to make an informed decision.

US federal law, and state law in 14 states, require that a franchise prospect receive a current copy of the 75 - 100 page document known as the Uniform Franchise Offering Circular (UFOC) at the first meeting with a representative of the franchise company. A current copy of the UFOC must be in the possession of the prospect for 14 calendar days before the prospect may sign any commitment or make any deposits. Finally, the franchise contract, with all blanks filled in, must be in the possession of the prospect for five business days before he may sign it. Similar documentation and procedures are required under Canadian law.

Below, you will find the definition of a franchise, according to the US Federal Trade Commission as well as the table of contents for a UFOC. There are a full twenty-three points in total, consolidated here into thirteen.

A franchise is "An agreement for consideration by which a person permits the distribution of goods or services under his trademark, service mark, or trade name, during the term of which the grantor retains control over others or renders significant assistance to others."

UFOC Contents
Franchisor, predecessors, affiliates and the officers and their business experience
Litigation and bankruptcy
The estimated initial investment and all fees, including the initial franchise fee, ongoing royalties, advertising fees, site fees, transfer fees, etc.
Restrictions on the sale of products and services and also on their sources
Franchisor's obligations and the franchisee's obligations
Available financing and territory rights
Obligations to participate in the operation of the business
Renewal, termination, transfer and dispute resolution
Earnings and/or sales claims
List of outlets and franchisees, including all who left in the last year, and three years of opened or closed units
Audited financial statements of the franchisor
Franchise agreement, leases and other documents
Receipt of the Circular to be signed by the prospect