The FTC (Federal Trade Commission) and state laws and regulations govern the sale of franchises and regulate franchise relationships.
Franchise Sales Regulation
- Domestically, AFC® complies with the FTC Rule on Franchising and various state franchise registration and disclosure laws. AFC issues a detailed disclosure document each year, which is generally referred to as the Franchise Disclosure Document (FDD), formerly known as the Uniform Franchise Offering Circular (UFOC). AFC files the FDD with several states prior to initiating franchise sales in those states.
- If AFC intends to terminate or not renew a franchise, it generally must have good cause and provide advance written notice, which ranges from ten (10) days to one hundred and twenty (120) days.
- Internationally, AFC also complies with the franchise registration and/or disclosure laws of other countries. AFC issues separate disclosure documents for each of the countries that require pre-sale registration and/or disclosure. AFC also complies with the laws in those countries that require good cause and advance notice of termination and/or nonrenewal.
As a result:
- At the earliest of the first face-to-face meeting between AFC and a prospective franchisee or ten (10) business days (fourteen (14) calendar days in Illinois) before the prospective franchisee pays any money to AFC or signs any contract with AFC, or as otherwise required by the state or country at issue, AFC provides each prospective franchisee with a FDD or international disclosure document containing detailed information about AFC, the franchise system, the required investment and the contracts that will be signed.
- Prospective AFC franchisees receive signature copies of all franchise contracts at least five (5) business days, or as otherwise required by the country at issue, before they are signed.
- AFC employees will not make oral or written representations, especially financial projections, that are not contained in the FDD.
- All AFC FDD's are delivered to meet the deadlines mandated by the FTC or the relevant state, or country.
- AFC FDD's are generally valid for one (1) year except in the event of a material change, in which case AFC will update the FDD.
AFC's obligations vary by state and country, but often also include:
- limitations on our refusal to approve proposed transfers;
- rights granted to franchisees to form franchisee associations; and
- restrictions on our ability to discriminate among similarly situated franchisees.
For more information:
Office of General Counsel