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 Oregon Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule is a comprehensive list of information and disclosures that franchisors are required to provide to potential franchisees in the state of Oregon. This checklist ensures that prospective franchisees have access to all the necessary information before making an informed decision about investing in a franchise opportunity. The Oregon Checklist covers various aspects that must be disclosed, including: 1. Franchisor's business experience: This involves providing details about the franchisor's history, qualifications, and any prior business experience. 2. Franchise fees: Information about the initial franchise fee, ongoing royalties, and other fees must be clearly stated to give potential franchisees a complete understanding of the financial obligations. 3. Initial investment: A breakdown of the estimated initial investment required for starting the franchise, including costs such as equipment, licenses, insurance, and marketing. 4. Financing options: If the franchisor offers any financing options for prospective franchisees, those details must be disclosed, including interest rates, terms, and any collateral required. 5. Litigation history: Any existing or past litigation involving the franchisor, its officers, or predecessors must be disclosed, including any ongoing disputes or settlements. 6. Obligations of the franchisee: The franchisor's expectations from the franchisee, including training requirements, ongoing support, and marketing obligations, must be clearly outlined. 7. Territory restrictions: Details on any exclusivity or territorial rights that may affect the franchisee's market access or protection should be clearly stated. 8. Intellectual property: Information about trademarks, copyrights, patents, and any restrictions on their use by the franchisee should be disclosed. 9. Renewal and termination: Disclosures regarding the terms and conditions for renewal or termination of the franchise agreement, including any fees or penalties involved. 10. Financial statements: Franchisors must provide audited or reviewed financial statements to demonstrate their financial stability and viability. 11. Contact information: The franchisor's contact details, including address, phone number, and website, should be provided to facilitate communication with potential franchisees. It's important to note that this checklist adheres to the FTC Franchise and Business Opportunity Rule, which sets federal guidelines for the disclosure of franchise-related information. While the Oregon Checklist encompasses the core disclosures required by the FTC, it may include additional state-specific requirements to ensure compliance with Oregon's regulations. By using this detailed Oregon Checklist, prospective franchisees can evaluate franchise opportunities thoroughly and make informed decisions based on transparency and complete disclosure of relevant information.
