Friday, December 23, 2005

Franchising Resources

Franchising law in Maryland is governed by Business Regulation Article 14-201 and applicable regulations at COMAR These laws largely take their lead from the federal regulation--enacted at 16 CFR 436 by the FTC in 1978--which imposes disclosure requirements on the sale of franchises. For an overview of the rule, see this summary from the FTC. The FTC rule requires the seller of a franchise to disclose to the prospective buyer basic information--arranged in a standardized form--about the franchise. The FTC has ruled that a franshisor can use either the FTC format or the more common Uniform Franchise Offering Circular (UFOC) format deleloped by the North American Securities Administrators Association (NASAA). The UFOC format consists of a list of 23 disclosure items. For more background see "Franchising 101." Although the FTC rule requires disclosure to a potential franchise buyer, it doesn't require you to file the form with the FTC. As such, there's no database on the FTC website which affords you access to these documents. Moreover, even though Maryland does require the franchisor to file with the state, these documents are not online. The only online resource for these documents seems to be a vendor called sells UFOC's for typically around $220. If you don't need the info right this minute, though, you may be able to get it free from the Securities Division of the Maryland Attorney General's Office. If you're just interested in locating the franchise agreement (and not the UFOC) you might get lucky finding this online, simply by searching using a regular search engine like Google. (Thanks to Andy Zimmerman for getting me started on this).


Blogger myrtle mayers said...

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5:15 AM  

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