The UFOC/ FDD is a regulatory document produced by the franchisor to the prospective franchisee, containing the franchise agreement, the disclosure statement, financial statements, and other agreements the franchisee will be required to sign. The contents of the UFOC/ FDD are regulated by the FTC. It is designed to provide the franchisee with the information needed to make an informed decision about investing in the franchise.
In addition to the financial statements and franchise agreement that the franchisee must sign, the UFOC/ FDD consists of 23 items of information describing various aspects of the franchise. These cover topics like a franchise description, obligations of franchisor and franchisee, initial fees, investments, bankruptcy history, and litigation history.
The receipt of the UFOC/ FDD is governed by a cooling-off period, in which franchisees are legally entitled to wait a duration of 10 business days before they are allowed to sign the franchise agreement. This gives the franchisee sufficient time to think about the decision to purchase the franchise.
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