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.
New Hampshire Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule In accordance with the FTC Franchise and Business Opportunity Rule, New Hampshire requires franchisors to disclose certain matters to prospective franchisees. This checklist outlines the key information that must be disclosed to ensure transparency and informed decision-making. Familiarizing yourself with these requirements will help both franchisors and prospective franchisees navigate the franchising process confidently. 1. Complete and Accurate Disclosure Document: Franchisors must provide a comprehensive disclosure document, also known as Franchise Disclosure Document (ADD), which includes all required information about the franchisor, franchise opportunity, and terms of the agreement. This document should be up-to-date and accurate, containing the information mandated by both the FTC and New Hampshire state law. 2. Background and Experience of the Franchisor: Franchisors must disclose their background, history, and any litigation or bankruptcy history. This includes the identity of key personnel, such as officers, directors, and management. Prospective franchisees have the right to know the individuals behind the franchise and their qualifications. 3. Franchise Fees and Other Initial Investments: A clear breakdown of all fees and costs associated with becoming a franchisee should be disclosed. This includes initial franchise fees, equipment costs, leasehold improvements, and any other financial obligations required to start the franchise. 4. Ongoing Royalties and Fees: Franchisors must disclose any ongoing royalties, ad fund contributions, and marketing fees that franchisees are required to pay periodically. These financial obligations are crucial for prospective franchisees to understand their financial commitments throughout the franchise term. 5. Training and/or Assistance: Any training programs, assistance, or ongoing support provided by the franchisor should be clearly outlined. This includes information related to initial training, ongoing education, and operational support. Prospective franchisees need to understand the level of support they can expect to receive from the franchisor. 6. Territory Restrictions and Exclusivity: Franchisors should disclose the territorial rights granted to franchisees and any restrictions imposed on selling outside their designated territory. Additionally, if exclusivity is granted or denied, such details should be provided in the disclosure document. 7. Intellectual Property and Proprietary Systems: Franchisors must disclose details about trademarks, patents, copyrights, trade secrets, and other intellectual property the franchisee will be authorized to use. Additionally, any restrictions or limitations on the use of these intellectual property rights should be made clear. 8. Renewal, Termination, and Transfer: Franchisees should be aware of the terms and conditions under which the franchise agreement can be renewed, terminated, or transferred. This includes any associated fees, restrictions, or obligations during such processes. 9. Financial Statements: Franchisors must provide audited financial statements to prospective franchisees. These statements should give an accurate representation of the franchisor's financial health, stability, and viability. Types of New Hampshire Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule: While there may not be specific types of checklists under the New Hampshire law, the checklist mentioned above covers the key areas that must be disclosed. However, it is imperative for both franchisors and prospective franchisees to consult with legal professionals or franchise specialists to ensure compliance with all the relevant federal and state regulations. Remember, thorough disclosure and understanding of all pertinent information is vital for a successful and mutually beneficial franchisor-franchisee relationship.
