Examine franchise relationship before deciding

Sales by franchises make up about a third of the retail and service sales in the United States, and current trends indicate sales by franchises will continue to grow. If you are interested in buying a franchise, there are a number of legal and financial issues to consider before entering into an agreement.

As a prospective franchise purchaser, you should first examine carefully the franchisor's documents.

Franchise offerings must comply with one of two disclosure formats of the Federal Trade Commission (FTC) or the Uniform Franchise Offering Circular (UFOC).

These disclosure formats are designed to give parties considering the purchase of a franchise as much relevant information as possible so that an informed decision may be made.

The UFOC disclosure format requires franchisors to inform purchasers on some 20 issues.

Some of the required disclosures relate to the identity and business experience of those affiliated with the franchisor