Franchisors must keep their UFOC’s up-to-date, and at a minimum, must be updated when:
- The information contained in the UFOC document must be current as of the close of the franchisor’s most recent fiscal year. After the close of the year, the franchisor must prepare a revised disclosure document within 90 days.
- The franchisor must update its disclosures to reflect any material changes within a reasonable time after the close of each fiscal year quarter. A material change is generally “any fact, circumstance, or set of conditions which has a substantial likelihood of influencing a reasonable franchisee or a reasonable prospective franchisee in the making of a significant decision relating to a named franchised business or which has any significant financial impact on a franchisee or prospective franchisee.” Examples of a “material change” include:
- changes in the franchisor’s management, corporate structure, address or interim financial statements;
- changes to the offer itself;
- closing or failing to renew a significant number of franchisees; and
- the filing of material litigation or administrative proceedings.
- Third, the FTC Rule contains specific updating requirements if a franchisor makes earnings representations. A franchisor must notify prospective franchisees of any material changes in the information contained in its attached earnings claim document prior to entering into the franchise relationship.