Franchsiors and Mandatory Disclosures
Buying a franchise is an important decision and can be a complicated process. The Federal Trade Commission regulates franchise agreements and relationships between franchsiors and franchisees.
Many states have enacted laws requiring additional disclosures and specify how franchise operations within the state are taxed. Florida disclosure requirments imitate the FTC requirements.
The FTC is very involved in making sure franchisors disclose vital information to franchisees before buying into a franchise. The FTC requires the franchisor to disclose the following matters: parents, predecessors, and affiliate entities; business experience; possible or current litigation; bankruptcy; initial fees; general fees; estimated initial investment requirements; restrictions on sources of products and services; franchisee's obligations; financing; franchisor's assistance, advertising, computer systems, and training; trademarks, patents, copyrights and propriety information; obligations to participate in actual operation of the franchise business; restrictions on what the franchisee may sell; renewal, termination, transfer and dispute resolution; relationships with any public figures; financing performance representations; outlets and franchise information; financial statements; contracts; and transactional receipts related to the franchise.
In addition, if you are looking into purchasing a franchise that offers motor fuel for sale, consignment, or distribution in commerce, the franchise relationship must abide by the Petroleum Marketing Practices Act. This Act governs termination and nonrenewal of franchise agreements. You can find more information about FTC regulations at Disclosure Requirments and Prohibitions Concerning Franchising and Business Opportunity Ventures.
If you have a question about your franchise rights or obligations, contact Wood, Atter & Wolf, P.A., a Jacksonville, Florida law firm.
