| Since the new FTC Franchise Rule became effective | | | | required format in all states as of July 1, 2008. |
| in 2007, many persons wonder what the major | | | | New FTC Franchise Rule Transactional Changes |
| differences are between the old Uniform Franchise | | | | A transactional change with the new FDD rules and |
| Offering Circular (UFOC) and the new FTC Franchise | | | | regulations relates to the time a prospective franchisee |
| Disclosure Document (FDD). Of particular interest to | | | | must have the document in their hands before |
| franchise companies is how long it takes to convert an | | | | contacts can be signed or any money paid. The |
| old UFOC to the new FDD format. Franchise buyers | | | | former rule said the UFOC had to be delivered at the |
| wonder if anything has changed about when an FDD | | | | "first personal meeting" and in hand for at |
| must be given to them under the new regulations. | | | | least ten business days. A seperate, completed |
| FDD vs. UFOC | | | | franchise agreement also had to be delivered to the |
| In summary, what the FTC's new Franchise Disclosure | | | | prospective franchisee for at least five business days. |
| Document or FDD format does is take the prior | | | | Under the new FTC franchise rule, the first personal |
| Uniform Franchise Offering Circular disclosures, modify | | | | meeting requirement is eliminated, replaced with a |
| them in certain respects and rename the document. | | | | fourteen calendar day minimum review period that |
| It’s now called a Franchise Disclosure | | | | simplifies the complexity of completing franchise |
| Document or FDD. There are still 23 individual Items | | | | transactions. There's another seven calendar day |
| (chapters) and although the revisions are not that | | | | contract reiew period that kicks in if the franchise |
| substantive, they are numerous. A franchise attorney | | | | company makes unilateral and material changes to the |
| familiar with the new FDD format should be able to | | | | franchise agreement (or other agreement) attached to |
| convert the old UFOC to a new FDD within ten to | | | | the FDD. |
| twenty hours, plus or minus. The Table of Contents for | | | | Electronic Delivery of FDD |
| an FDD can be found within the information at the | | | | Stepping into the 21st century, the new FTC Rule |
| franchise a business page of the Franchise | | | | permits delivery of the FDD by electronic means, such |
| Foundations website. | | | | as email and downloading from a website. The cover |
| FDD Phase In Period | | | | page of the FDD now contains the franchise |
| The phase in period for the FDD is now over. The | | | | company's website and email address. |
| new FDD format was permissive starting July 1, 2007. | | | | Copyright 2008-2009 Kevin B. Murphy, B.S., M.B.A., J.D. |
| It became mandatory starting July 1, 2008. So | | | | - all rights reserved |
| franchise companies cannot make any offers or sales | | | | For more informatiion, visit the Franchise Foundations |
| using or distributing the old UFOC. The new FDD is the | | | | website. |