If you are going to be in the business of operating and selling franchise opportunities, you need to be aware of the requirements of the Federal Trade Commission (FTC). The FTC monitors and regulates franchise sales in the United States. You can visit the FTC website and search for franchise information.
Find out the franchise rules specific to your state.
For most of the United States, the FTC Franchise Rule will be the governing requirement. However, several states have also enacted their own franchise statutes. You should check with your state Secretary of State or Attorney General’s office to find out if there are specific state laws governing franchise offerings in your state.
Review the Uniform Franchise Disclosure Document.
The Uniform Franchise Disclosure Document is a sample designed to provide the basis for a valid Franchise Disclosure Document in most states. If you follow the example and explanations of the Uniform FDD, then your own FDD must meet federal expectations.
Consult with a franchise attorney and/or accountant to prepare your FDD.
The FDD is expected to be a comprehensive document. An FDD can be 100-200 pages long and include detailed financial and legal information about your business. You should work with your company’s attorney and accountant to finalize the FDD.
Before deciding if you want to sell franchises, you must be very aware of all the rules and regulations related to this type of business. Each state has its own rules, and often these rules mirror the federal rules. It is your duty to familiarize yourself with all the rules or you could end up in major legal trouble.
