Sample Franchise Disclosure Document – Item 15: Obligation to Participate in the Actual Operation of the Franchise Business

Sample Item 15-1: Obligation to Participate in the Actual Operation of the Franchise Business

ITEM 15: OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

If you are an individual, you must directly supervise the franchised business on its premises.

If you are a corporation, a person who owns at least a 1/3 share of the corporate equity must perform the direct, on-site supervision of the franchised business.

Item 15-2: Obligation to Participate in the Actual Operation of the Franchise Business

ITEM 15: OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

We do not require that you personally supervise the franchised business, but we do recommend it.

In any case, the business must be directly supervised “on premises” by a manager who has successfully completed our training program. The on-premises manager cannot have an interest or business relationship with any of Belmont’s business competitors. If the franchisee is a corporation or a partnership, the manager need not have an ownership interest in it. The manager must sign a written agreement (Exhibit G) to maintain confidentiality of the trade secrets described in Item 14 and to conform with the covenants not to compete described in Item 17.

CREDIT: The content of this post has been copied or adopted from the Federal Trade Commission’s Franchise Rule Compliance Guide.