The overview that follows highlights key changes and provides sample disclosures for each item in the disclosure document required by the amended Rule.
Table of Contents
The Cover Page
The disclosure document begins with a cover page that provides prospective franchiseeswith information about the franchise being offered for sale. The amended Rule updates theoriginal cover page to include references to the franchisor’s email address and website. It alsoprovides prospective franchisees with additional sources of information, including a reference tothe FTC’s Consumer’s Guide to Buying a Franchise (“Guide”).9 While the amended Ruleprohibits the inclusion of links to external materials in a disclosure document, franchisors may, ifthey wish, link to the Guide on the page on the FTC’s web site where that specific document isfound.
When preparing the cover page, franchisors must follow the specific order and form setout in the Rule. The title of the cover page is “FRANCHISE DISCLOSURE DOCUMENT,”and it must appear in both capital letters and boldface type. The cover page must next state thefranchisor’s name, type of business organization, principal business address, telephone number,and, if applicable, the franchisor’s email address and the address of the primary Internet homepage of the system being offered for sale. Franchisors need not list every home page addressowned by, or associated with, the franchise system. The cover page must also include a sampleof the primary business trademark that franchisees will use in the business and provide a briefdescription of the franchised business. Certain prescribed statements must also be included inthe cover page.
Reference to Item 5 and Item 7 Fees and Investment
The total investment necessary to begin operation of a [franchise systemname] franchise is [the total amount of Item 7]. This includes [the totalamount in Item 5] that must be paid to the franchisor or affiliate.
Available Disclosure Formats
You may wish to receive your disclosure document in another format that ismore convenient to you. To discuss the availability of disclosures indifferent formats, contact [name or office] at [address] and [telephonenumber].
For purposes of this disclosure, an “address” may be an email address, business address, or both.
A franchisor must include the issuance date for the disclosure document on its coverpage. The “issuance” date is very flexible, meaning any date upon which the franchisor finalizesthat version of the disclosure document for future use. States that require franchisors to registertheir disclosure documents, however, may use the term “effective date,” meaning the date uponwhich the state formally approves registration of the disclosure document. Where a franchisorseeks registration in one or more states, the franchisor may use, in lieu of an issuance date, an“effective” date consistent with state approval of the document. A franchisor obtaining aneffective date from a registration state may also use the term “effective date,” even in nonregistrationstates.