A franchise or business opportunity seller must give the prospective buyer a detailed disclosure document at least ten (10) business days before the buyer pays any money or legally commit himself to a purchase. The disclosure document includes:
" Names, addresses, and telephone numbers of at least 10 previous purchasers who live closest to the buyer;
" A fully audited financial statement of the seller;
" Background and experience of the business's key executives;
" Cost of starting and maintaining the business; and
" The responsibilities buyer and the seller will have to each other once the buyer has invested in the opportunity.
Franchise sellers also must tell a prospective buyer in writing the number and percentage of owners who have failed.
The Georgia Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule is a crucial document for both franchisors and prospective franchisees in the state of Georgia. This checklist outlines the specific information that must be disclosed to potential franchisees to ensure transparency and protect their interests. Here are the key elements and keywords associated with this checklist: 1. Franchise Disclosure Document (ADD): Under the FTC Franchise and Business Opportunity Rule, franchisors are required to provide a comprehensive ADD to prospective franchisees. The ADD must include specific information such as initial fees, ongoing fees, territory restrictions, and any litigation history. 2. Financial Performance Representation (FPR): If a franchisor makes any representations about the potential financial performance of their franchise, it must be included in the ADD. This could include average revenue figures, profit margins, or any other financial data. 3. Litigation and Bankruptcy History: Any history of legal actions, lawsuits, or bankruptcies involving the franchisor or its key personnel must be disclosed. This allows prospective franchisees to assess the potential risks associated with the franchise. 4. Franchisee Obligations: The checklist should include a detailed description of the obligations and responsibilities of the franchisee, such as operational requirements, marketing obligations, and ongoing fees. 5. Renewal and Termination: The terms and conditions for franchise renewal and termination should be clearly stated. This includes any fees or penalties associated with termination or non-renewal of the franchise agreement. 6. Training and Support: The checklist should outline the training and ongoing support that the franchisor will provide to the franchisee. This includes initial training, assistance in site selection, marketing support, and access to proprietary software or systems. 7. Intellectual Property Rights: Disclose information about trademarks, trade secrets, patents, copyrights, or any other intellectual property rights that the franchisee will have access to, as well as any restrictions on their use. 8. Financial Disclosures: The franchisor should disclose all fees that the franchisee may be required to pay, including initial franchise fees, royalties, advertising fees, or any other ongoing fees. The checklist should also mention any restrictions on the franchisee's ability to sell or transfer their franchise. It's important to note that while the above elements are generally required by the FTC Franchise and Business Opportunity Rule, some states, including Georgia, may have additional requirements. Therefore, it is essential for both franchisors and prospective franchisees in Georgia to consult the specific state laws and regulations to ensure compliance and protect their interests.
