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.
Maine Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule includes a comprehensive set of guidelines and requirements for franchisors seeking to disclose necessary information to potential franchisees. This checklist ensures that all relevant details are provided to prospective franchisees in a transparent and lawful manner, in line with the federal regulations set forth by the Federal Trade Commission (FTC). Some of the key matters that must be disclosed to prospective franchisees in accordance with the FTC Franchise and Business Opportunity Rule in Maine are: 1. Franchise Fees: The checklist mandates the disclosure of all initial franchise fees that the franchisee will be required to pay. This includes any franchise purchase fees, training fees, or royalties. 2. Obligations and Restrictions: Franchisors must disclose all obligations and restrictions that franchisees are subject to, such as operational guidelines, advertising requirements, and any limitations on the use of intellectual property. 3. Franchisee Training Programs: Details regarding the training programs provided by the franchisor must be fully disclosed. This includes information about the duration, content, location, and costs associated with the training. 4. Territory: The checklist ensures that prospective franchisees are informed about the geographical territory in which they will operate. It includes insights into any exclusivity or restrictions applied to the territory, as well as any plans for territorial expansion. 5. Intellectual Property: Franchisees should be made aware of the trademark or other intellectual property rights associated with the franchise system, including guidelines on proper use and potential infringement issues. 6. Financial Performance Representations: If the franchisor makes any claims or representations regarding the potential financial performance of the franchise, these must be disclosed to prospective franchisees. These claims should be supported by reliable and substantiated data. 7. Renewal and Termination: Guidelines for franchise renewal and termination, including the conditions, notice periods, and potential penalties, must be clearly outlined in accordance with the FTC Rule. 8. Litigation History: The checklist requires franchisors to disclose information concerning any past or pending litigation involving the franchisor and its key personnel. This includes details about any legal actions or disputes that could affect the franchisee's operations. 9. Contact Information: Franchisors must provide their contact information, including physical address, phone number, email address, and website, for potential franchisees to reach out for additional information or clarification. It is important to note that while these requirements are applicable nationwide under the FTC Franchise and Business Opportunity Rule, individual states may have additional provisions or regulations. Franchisors should review and comply with Maine's specific franchise laws to ensure full compliance and avoid any legal repercussions.
