Complying with Federal Regulations for Franchises
9.4 Assignment Complying with Federal Regulations for Franchises
You have operated one of your property sites as a prototype for the Franchise Operation. The properties are all in upscale locations that support the Restaurant’s thematic Desert profile.
This new site has test-marketed the Franchise concept with the patented dessert brand, “Brain Freeze,” that savory specialty formulated dessert treat created by Sally.
The desert has become so popular that many customers have requested extra take-home orders. A substantial number of patrons have even asked if the dessert would ever be sold separately in markets. The dessert menu has a strong sales position in overall restaurant sales and generated a cash flow that supported the entire overhead of the test model.
Your company is now ready to launch the Franchise Operation, but you must first complete this next assignment.
This Assignment is a Blue Font exercise; make sure you complete the document using a readable Blue Font.
You have operated a company-owned property site as a prototype for your Franchise Operations. The other properties owned by your company are all in upscale locations that support the Restaurant’s thematic Desert franchise market profile.
The desert has become so popular that many customers have requested extra take-home orders. A substantial number of patrons have even asked if the dessert would ever be sold separately in food markets. The dessert menu demonstrated a strong sales position using the test market compared to overall restaurant sales. It generated a cash flow that supported the entire operation costs of the franchise business operations plans.
Your company is now ready to launch a National Franchise Operation, but you must first complete the statutory requirements and complete the draft agreement with your revisions.
Assignment: Assemble the documents required to establish a National Franchise operation. Review the Partial FDD Franchise Information (PDF) that outlines the partial Franchise requirements that legally permit your company to sell and enter into franchise agreements with franchisees. This document outlines your franchise profile. Compare the information in the Partial Franchise Disclosure Document (PFDD) using the statutory specifications found in the:
Electronic Code of Federal Regulations website (https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436#_top) (ECFR). PART 436—DISCLOSURE REQUIREMENTS AND PROHIBITIONS CONCERNING FRANCHISING:
Subpart B—Franchisors’ Obligations and
Subpart C—Contents of a Disclosure Document
Ensure all statutory requirements are in the PFDD Document any missing sections highlighting any deficiencies or variations from the Statute, if any.
Next, complete and revise the following Agreement: FDD Franchise Agreement (DOCX) . Complete all blanks “___” or bracketed “[ ]” sections with the appropriate information (Use the Blue Font color) and provide any other missing terms required to solicit prospective Franchisees. Make sure the Agreement terms are consistent with the statutory requirements. Use your responses to questions in the Franchise Agreement Checklist completed in Assignment 9.3 to assist in completing 9.4.
This assignment requires you to demonstrate your understanding and ability to redraft an agreement and compliance with the legal provisions that meet your companies’ franchise requirements and comply with the statutory franchise legal requirements. The accuracy and completeness of your responses in 9.3 will determine your ability to redraft sections of the Franchise Agreement and complete paragraphs in the document with detailed information. You are permitted to create “best judgment” responses using the Case Study as support for information not directly provided.