What is the FTC Franchise Rule?

It is a federal regulation which requires franchisors to prepare an extensive disclosure document and to give a copy to any prospective franchise purchaser before buying a franchise. The disclosure document typically used to comply with the Rule is called a Uniform Franchise Offering Circular, or UFOC. Within the UFOC are many different categories of information about the franchise. Required fees, basic investment, bankruptcy and litigation history of the company, how long the franchise will be in effect, a financial statement of the franchisor, and earnings claims all are presented in this disclosure document.