The five most frequently asked questions about franchise
and business opportunities are:
can I get a company's pre-sale disclosures?
can I find out about complaints against a company?
can I file a complaint against a company?
can I get the forms for drafting an offering circular?
can I find a lawyer who specializes in franchising?
- 1. Where can I get a company's
- The FTC does not require filings of franchise and business
opportunity disclosure statements or offering circulars.
For this reason, we are unable to provide copies of them.
- There are 13 states that do keep franchise offering circulars
on file, and 23 states that require business opportunity
disclosure filings. Most states aren't able to provide copies
of these disclosures, but usually will let you visit their
offices and review or copy the documents by appointment.
One private company will obtain franchise disclosure documents
filed in one or more states for a fee:
1155 Connecticut Avenue, NW
Washington, DC 20036
(800) 793-8640 or (202) 659-8640
- List of state offices with
- List of state offices with business
- 2. How can I find out about complaints
against a company?
- No federal or state agency or private organization can
tell you whether or not a company is legitimate or operates
in good faith. We can only report on whether we have received
consumer complaints about a company. Operators of fly-by-night
franchise and business opportunity scams know this, and
may change the name and location of their company every
six to twelve months so they never have a record of consumer
There is no substitute for checking the track record
of a franchisor or business opportunity seller by talking
to at least ten prior purchasers in person. That is why
the Franchise Rule requires companies to include in their
disclosures a list of the names, addresses and telephone
numbers of at least the ten prior purchasers who are geographically
closest to you.
If you want information about consumer complaints, we
must ask that your request be in writing. We need to check
whether complaints have been received not only in Washington,
but also in our 10 regional offices. You can address your
- Freedom of Information Act Request
Federal Trade Commission
Washington, D.C. 20580.
Please identify your letter as a "FOIA Request"
and include (1) your name, address and daytime phone number,
and (2) the name and address of the company you are checking
In most cases, there are no fees for searching, document
review, or copying for members of the general public.
It is a good idea, however, to state the maximum you are
willing to pay, so we can contact you in the unusual event
that any applicable fees for these services will cost
more than the limit you set.
- 3. How can I file a complaint
against a company?
- We regret that you're having a problem with a franchisor
or business opportunity seller. We'd like to help, but can't
guarantee we'll be able to, because the Commission lacks
the resources to investigate every individual complaint
it receives. For this reason, we urge that you also consider
talking with a private attorney about the feasibility of
bringing a private lawsuit, or taking other individual or
group action that may help resolve the problem.
We would like to encourage you to send us your complaint
because consumer complaints give us important information.
They help us identify companies and practices that affect
a broad segment of the public, and are useful for law
We ask that all complaints be in writing, but no special
form is required. A short one- or two-page letter is fine.
Just tell us what you think was misleading or deceptive
in the company's promotional materials, disclosure statement
or offering circular. If you want your letter kept confidential,
please print the words, "Privileged and Confidential,"
on the top of each page.
Be sure your letter includes your name, address, and
a daytime telephone number where we can reach you. It
will help if you can provide the names and telephone numbers
of other purchasers who have experienced the same problems,
and if you can send us copies of any written claims in
promotional materials or elsewhere that you believe are
false. Be sure to send copies, not originals, of any documents
you think we should have.
Please address your complaint to:
- Franchise & Business Opportunity Complaint
Federal Trade Commission - Rm. 238
Washington, D.C. 20580.
- 4. Where can I get the forms
for drafting an offering circular?
- The Franchise Rule provides its own disclosure format,
which is published in the Code of Federal Regulations, Volume
16, Part 436 (16 CFR § 436). The Commission also permits
the use of an alternative disclosure format called the Uniform
Franchise Offering Circular, or "UFOC," issued
by the North American Securities Administrators' Association,
for Franchise Rule compliance. A copy of the Guidelines
for preparing UFOC disclosures, which franchisors wishing
to use the UFOC must follow to comply with the Franchise
Rule, can be obtained from:
- North American Securities Administrators'
One Massachusetts Avenue, N.W.
Washington, D.C. 20001
The current Guidelines are also reprinted in the Business
Franchise Guide published by Commerce Clearing House,
Inc., which is available in many law libraries.
- 5. How can I find a lawyer who
specializes in franchising?
- You can start by checking with your state bar association.
Many state bar associations allow member lawyers to identify
the areas of practice in which they specialize, and franchise
or distribution law is a recognized specialty in an increasing
number of states.
The American Bar Association also publishes a Membership
Directory of the Forum Committee on Franchising. The Directory,
which is organized by state and city, lists the names,
addresses and telephone numbers of attorneys who are members
of the Forum Committee. You can obtain a copy of the Directory
- American Bar Association Service Center
750 North Lake Shore Dr.
Chicago, IL 60611