WHAT IS THE UFDD?

The purpose of the UFDD is to provide prospective franchisees with information about the franchisor, the franchise system. In addition to the disclosure part of the document, the UFDD includes the actual franchise agreement as well as other agreements the franchisee will be required to sign, along with the franchisor's financial statements.

The UFDD is designed to give you some of the information you need in order to make an informed decision about investing in a particular franchise. By law, a franchisor cannot offer a franchise until the franchisor has presented a franchisee with a Disclosure Document. In fact, fourteen states require franchisors to register their UFDD's with the state or to notify them that they will offer franchisees before they begin to conduct any franchising activity in the state.

The UFDD includes information on the following: the franchisor, the company's key staff, management's experience in franchise management, franchisor's bankruptcy and litigation history, initial and ongoing fees involved in opening and running the franchise, required investment and purchases, territory rights, responsibilities of the franchisor and franchisee and finally, other franchisees in the system with their contact information.

The receipt of the UFDD is governed by the "ten-day rule." This is a cooling-off period in which franchisors must give prospective franchisees 10 business days to think about their decision before they are allowed to sign the franchise agreement.