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 Mexico Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule Keywords: New Mexico, checklist, matters disclosed, prospective franchisee, FTC Franchise and Business Opportunity Rule. Description: The New Mexico Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule is an essential tool for both franchise companies and prospective franchisees in the state of New Mexico. This checklist ensures that all necessary information is provided to prospective franchisees as required by the Federal Trade Commission's (FTC) Franchise and Business Opportunity Rule. The primary purpose of this checklist is to ensure transparency and protect prospective franchisees from deceptive practices, enabling them to make informed decisions before investing their time and capital into a franchise opportunity. The checklist is designed to cover a wide range of crucial matters that a franchisor is obliged to disclose, including but not limited to: 1. Franchisor Information: The checklist includes key details about the franchisor, such as its full legal name, address, business experience, litigation history, and contact information. 2. Franchise Fees: It covers all fees and charges associated with the franchise system, including initial franchise fees, ongoing royalties, advertising contributions, and any other payments required from the franchisee. 3. Initial Investment: This section provides a detailed breakdown of the estimated initial investment that a franchisee needs to make, including costs related to equipment, inventory, leasehold improvements, and other necessary expenditures. 4. Franchise Term and Renewal: It outlines the initial term of the franchise agreement, any conditions for renewal, as well as the process for terminating or transferring the franchise. 5. Training and Support: This section explains the training programs provided by the franchisor to ensure a franchisee's understanding of the business operations. It also details ongoing support, including marketing assistance, advertising obligations, and any additional resources available to franchisees. 6. Intellectual Property: The checklist should include information on any trademarks, copyrights, or patents associated with the franchise system. It should clarify the limitations and restrictions on the use of intellectual property. 7. Financial Performance Representation: If the franchisor makes any claims regarding potential earnings or financial performance, the checklist requires the inclusion of supporting data or documentation. 8. Territory: This section addresses the territory rights of the franchisee, including any exclusivity or non-compete provisions, and whether the franchisor operates or plans to operate competing businesses nearby. It is essential to comply with the FTC Franchise and Business Opportunity Rule when using the New Mexico Checklist. Failure to provide accurate and complete information may result in legal consequences. Prospective franchisees should carefully review the checklist and seek legal counsel to ensure they have a thorough understanding of the franchise opportunity before signing any agreements. Different Types of New Mexico Checklist Regarding Matters that must be Disclosed to Prospective Franchisee: While there may not be different types of New Mexico Checklists specifically focusing on matters disclosed to prospective franchisees, variations can occur based on industry-specific requirements or unique state regulations regarding franchise businesses. However, the core elements outlined above are typically common across different versions of this checklist. It is important for both franchisors and prospective franchisees to be aware of any additional state-specific requirements they need to fulfill during the franchise disclosure process.
