What is a Uniform Franchise Offering Circular and Why are Franchises Safer than most Biz Opps

Franchises are business opportunities which are regulated by the Federal Trade Commission, FTC and also by various State agencies. What this means to the common person is that franchises are required by law to disclose certain information about the owners, the company and also the current state of the franchise. The purpose of this information is to give the prospective purchaser a consistent idea of what exactly they are buying. The Uniform Franchise Offering Circular commonly known as the UFOC contains current and recent lawsuits against the owner and or officers of the franchisor, audited financial statements, the license agreement granting the franchise to the buyer, all franchisees and their contact information that are currently part of the system, also any franchisees that have left, been terminated or whose license agreements have expired. Additionally there is a list of the training materials supplied, as well as a detailed description of all cost and expenses that a franchisee expects to incur such as any equipment, leases, and or advertising and marketing expenses.

Franchise law compels the franchisor to publish information that would give the prospective purchaser a lot of information that they would have to dig and ask for on their own in order make a determination if the franchise is in good shape, what to expect and something about the owners. At the present time much of this information is not available for those that want to purchase a business opportunity. If per chance you live in one of the states where business opportunities are highly regulated such as Illinois for example then a registered Biz Opp must supply much of the same information as is supplied by a franchisor. However, there are so many of them out there that many operate illegally, aka without registering in even the registration states. Much of this may end soon as a new franchise law was recently passed in January of 2007 that separated Franchises from Business Opportunities. In addition a FTC national Business Opportunity Law is on it's way and will probably be in place in 2008. It is not currently known what the 26 states that currently require registration of business opportunities will do but suffice to say that normally states that pass laws that are more demanding that federal laws do no not normally ease them later in any event. These states can be seen at http://www.ftc.gov/bcp/franchise/netbusop.shtm.

So many people have lost significant sums of money purchasing what amounts to be bogus business opportunities that state and federal agencies have had little choice but to do something in order to protect those that are are being taken advantage of. Unfortunately there are a lot of people of there that will do anything to separate people without business accumen from their money and thus government will step in. On one hand one can take the side that anyone should know what they are buying prior to purchasing it, on the other hand some of the biz opp offers are very slick and good at inducing those that are unaware to buy. It is a constant battle of ethics, moral, responsibility and regulation. Basically franchise offers must tell you a lot more than business opportunity offers. That said not all of either are good or bad, later posts will tell you how to smoke out a rat.