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.
Mississippi Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule: 1. Franchise Fee: The franchisor must disclose the initial franchise fee, including any recurring fees, royalties, or payments. 2. Total Investment: The franchisor should provide a detailed breakdown of the total investment required to establish and operate the franchise, including costs for equipment, inventory, leasehold improvements, and working capital. 3. Restrictions on Sources of Products or Services: Any restrictions on the franchisee's ability to purchase products or services from suppliers not approved or designated by the franchisor must be disclosed. 4. Territory: The franchisor must describe the territory or geographic area in which the franchisee will operate, including any exclusivity rights or restrictions within that territory. 5. Intellectual Property Rights: Details on the franchisor's trademarks, copyrights, patents, or other intellectual property rights that the franchisee will be licensed to use must be disclosed. 6. Training and Support: The franchisor should outline the initial and ongoing training programs and support services provided to franchisees to help them operate the franchise successfully. 7. Termination and Renewal: The franchisor must specify the terms and conditions for termination of the franchise agreement, including grounds for termination and any rights to renew the agreement. 8. Financial Performance Representations: If the franchisor provides any information about the actual or potential financial performance of their franchise, it must be disclosed along with any supporting data or assumptions. 9. Litigation and Bankruptcy History: Franchisors need to disclose any past or ongoing litigation, bankruptcy filings, or judgments involving the franchisor, its principals, or any affiliates. 10. Franchisee Obligations and Restrictions: The obligations, duties, and restrictions placed upon the franchisee by the franchisor must be disclosed, including advertising requirements, operational standards, or any non-compete clauses. Different Types of Mississippi Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule: 1. Franchises in the Food and Beverage Industry: This checklist would specifically address the unique considerations and disclosures relevant to franchises in the food and beverage industry. 2. Franchises in the Retail Sector: This checklist would focus on the specific obligations and disclosures associated with retail franchises, such as those in the apparel, electronics, or home goods sectors. 3. Franchises in the Service Industry: This checklist would outline the matters that need to be disclosed for service-based franchises, such as cleaning services, healthcare, consulting, or education. 4. Home-based Franchises: Home-based franchise opportunities may require additional disclosures regarding the use of residential properties for business purposes, zoning requirements, and any potential limitations or restrictions. 5. Automotive Franchises: Franchises in the automotive industry may have unique disclosure requirements related to dealership agreements, warranty programs, parts and inventory management, or compliance with industry standards. 6. Online or E-commerce Franchises: This checklist would address the specific provisions relevant to franchises operating primarily through online platforms, covering topics such as website development, digital marketing, and fulfillment logistics. 7. Fitness and Wellness Franchises: Franchises in the fitness and wellness industry may require disclosures related to certifications, training programs, equipment sourcing, and compliance with health and safety regulations. 8. Real Estate Franchises: This checklist would focus on the unique considerations for real estate franchises, including disclosure of real estate license requirements, lead generation systems, and commission structures. 9. Pet Care Franchises: Franchises in the pet care industry may require additional disclosures related to licensing, training methods, animal health regulations, and pet care product sources. 10. Education and Tutoring Franchises: This checklist would encompass the matters specific to educational franchise opportunities, including curriculum development, teacher certification, accreditation, and educational materials' procurement.
