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.
Wyoming Checklist Regarding Matters that must be Disclosed to Prospective Franchisee in Accordance with FTC Franchise and Business Opportunity Rule: Title: A Comprehensive Guide to Wyoming's Franchise Disclosure Checklist Introduction: Wyoming, known for its stunning landscapes and vibrant business opportunities, requires franchisors to comply with the Federal Trade Commission's (FTC) Franchise and Business Opportunity Rule, ensuring transparency and fairness for prospective franchisees. This checklist outlines the specific matters that must be disclosed by franchisors in Wyoming, providing prospective franchisees with crucial information before making any investment decisions. 1. Franchise Eligibility: Before delving into the checklist, it is important to identify the different types of franchise opportunities that may exist in Wyoming. These can include business-format franchises, product distribution franchises, and manufacturing or processing franchises. 2. Disclosure Document: Franchisors must prepare and provide a comprehensive disclosure document to prospective franchisees. This document should follow the guidelines set by the FTC Rule, covering all mandatory disclosures per Wyoming law. 3. Franchisor Information: The disclosure document should include detailed information about the franchisor, including their legal name, business experience, litigation history, and bankruptcy disclosures. This information allows prospective franchisees to evaluate the credibility and stability of the franchisor. 4. Franchise Fee and Other Initial Payments: A breakdown of all fees and payments required to establish the franchise should be provided. This includes the initial franchise fee, royalties, advertising contributions, and any additional charges the franchisee may be obligated to pay. 5. Estimated Initial Investment: Prospective franchisees should have a clear understanding of the potential costs involved in starting and operating the franchise. The disclosure document must include an itemized list of estimated initial investment ranges, detailing expenses such as equipment, inventory, leases, and working capital. 6. Franchisee Obligations: Franchisors must disclose the obligations and responsibilities of the franchisee. This includes operational requirements, training and assistance offered by the franchisor, restrictions on products/services, and compliance with the franchisor's standards and policies. 7. Territory and Competition: The disclosure document should address any territorial limitations or exclusive rights granted to the franchisee. Additionally, it should disclose whether the franchisor or its other franchisees operate or will operate competing businesses within the territory. 8. Trademarks and Intellectual Property: Franchisees should be informed about the franchisor's trademarks, trade secrets, patents, and copyrights. The document must provide details on the extent of the franchisee's right to use and protect these assets, including any ongoing costs or liabilities involved. 9. Financial Performance Representations: Franchisors may choose to include financial performance representations (FRS) in the disclosure document. If provided, these FRS should comply with the FTC Rule's requirements and fairly represent the actual financial performance of the franchise. 10. Current and Previous Franchisees: Prospective franchisees should have access to a list of current and previous franchisees, including contact information. This allows them to conduct due diligence and gather valuable insights into the franchise system's success and support. Conclusion: By adhering to Wyoming's checklist of matters that must be disclosed to prospective franchisees, franchisors can establish trust, foster transparency, and comply with the FTC's Franchise and Business Opportunity Rule. Prospective franchisees, armed with this information, can make well-informed decisions and embark on successful business ventures in Wyoming's dynamic marketplace.
