How to Start Franchising
How to File a Uniform Franchise Offering Circular (UFOC)
Written by Ed Teixeira for Gaebler Ventures
Exploring how to convert your business into a franchising operation? We explain how to file a UFOC, which is an important step in the process.
In this third part of a five-part article on the steps to franchise a business, we cover the process for filing a UFOC, an important regulatory document that describes your franchising opportunity.
Completing the Uniform Franchise Offering Circular (UFOC)
For this activity, you’ll need the services of a franchise attorney. Using the results of a questionnaire and meeting with your attorney to review key outputs from the pror steps for creating a franchise oppportunity that we covered earlier, your franchise attorney will construct the franchise agreement.
You and your consultant will provide key input for the business items, and your attorney will provide the legal provisions that need to be in the agreement. The cost of a UFOC and franchise agreement will be in the $18,000 -$20,000 range or more!
This doesn’t include the filing fees for various state registrations. There are 15 registration states which require that the UFOC be filed and, where necessary, conform to that state’s franchise regulation.
It’s not necessary that the UFOC be registered in a particular state unless the franchisor offers franchises from that state or offers franchises to residents of a registration state.
If a franchisor is operating from New York, they must be registered in New York state but can’t sell to candidates in the other registration states unless the UFOC is filed in that state. Under this example, a franchisor could still sell franchises in 36 states.
Don’t have an agreement done until you’ve put your franchise program together and have the capital to start off on the “right foot.”
Ready for the next step? Learn about Developing a Franchising Operations Manual and Training Program
Ed Teixeira is President of FranchiseKnowHow, LLC, a franchise consulting firm; and a managing principal in the Bridge Business Broker Franchise Company. He may be reached at (631) 246-5782 or at www.franchiseknowhow.com.
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