FRANCHISE DISCLOSURE DOCUMENT

by | Feb 11, 2022 | Samples legal papers

 

FRANCHISE DISCLOSURE DOCUMENT 

 

LITTLE BUTTERFLIES CORPORATION, INC.

2121 Rolling Oak In

Garland Texas

75044

512-736-3459

 

littlebutterfliesfranchise@gmail.com

https://littlebutterfliesfranchiseopportunity.com/

 

Little Butterflies offers child care services including but not limited to day care businesses.

 

This disclosure document summarizes certain provisions of your franchise agreement and other information in plain English.  Read this disclosure document and all accompanying agreements carefully.  You must receive this disclosure document at least fourteen (14) calendar days before you sign a binding agreement with, or make any payment to, the franchisor or an affiliate in connection with the proposed franchise sale.  

 

The terms of your contract will govern your franchise relationship.  Don’t rely on the disclosure document alone to understand your contract.  Read all of your contract carefully.  Show your contract and this disclosure document to an advisor, like a lawyer or accountant.

Buying a franchise is a complex investment.  The information in this disclosure document can help you make up your mind.  More information on franchising, such as “A Consumer’s Guide to Buying a Franchise,” which can help you understand how to use this disclosure document, is available from the Federal Trade Commission.  You can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.  You can also visit the FTC’s home page at www.ftc.gov for additional information.  Call your state agency or visit your public library for other sources of information on franchising. 

 

There may also be laws on franchising in your state.  Ask your state agencies about them. 

 

Issuance Date: _______

 

LITTLE BUTTERFLIES CORPORATION, INC.

2121 Rolling Oak In

Garland Texas

75044.

 

FRANCHISE DISCLOSURE DOCUMENT FOR PROSPECTIVE FRANCHISEES

STATE OF TEXAS

LITTLE BUTTERFLIES CORPORATION INC.

2121 Rolling Oak In

Garland Texas

75044

 

Your state may have a franchise law that requires a franchisor to register or file with a state franchise administrator before offering or selling in your state.  REGISTRATION OF A FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT. 

 

 Call the state franchise administrator listed in the State Agency Exhibit for information about the franchisor, or about franchising in your state. 

 

 MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW 

UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES.  YOU MAY HAVE TO SIGN A NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO CONTINUE TO OPERATE YOUR BUSINESS BEFORE YOU BUY, CONSIDER WHAT RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO RENEW. 

 

Please consider the following RISK FACTORS before you buy this franchise: 

 

  1. THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES WITH US BY NON-BINDING MEDIATION, ARBITRATION OR LITIGATION IN TEXAS.  OUT-OF-STATE LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES.  IT MAY ALSO COST YOU MORE TO MEDIATE, ARBITRATE OR SUE US IN TEXAS THAN IN YOUR OWN STATE. 

 

  1. THE FRANCHISE AGREEMENT STATES THAT TEXAS LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW.  YOU MAY WANT TO COMPARE THESE LAWS. 

 

  1. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE. 

 

Effective Date: -__________________

 

LITTLE BUTTERFLIES CORPORATION INC.

 

INDEX

 

ITEM DESCRIPTION

 

  1. THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES…….
  2. BUSINESS EXPERIENCE 
  3. LITIGATION    
  4. BANKRUPTCY     
  5. INITIAL FEES 
  6. OTHER FEES 
  7. ESTIMATED INITIAL INVESTMENT 
  8. RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES 
  9. FRANCHISEES OBLIGATIONS 
  10. FINANCING 
  11. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS,  

AND TRAINING 

  1. TERRITORY 
  2. TRADEMARKS 
  3. PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION 
  4. OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE

 FRANCHISE BUSINESS 

  1. RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL 
  2. RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION 
  3. PUBLIC FIGURES 
  4. FINANCIAL PERFORMANCE REPRESENTATIONS 
  5. OUTLETS AND FRANCHISEE INFORMATION 
  6. FINANCIAL STATEMENTS     
  7. CONTRACTS 
  8. RECEIPTS      

 

EXHIBITS

 

[ANNEX ALL THE NECESARRY DOCUMENTS]

  • THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES

 

Franchisor

Little Butterflies Corporation Inc. LLC is hereby referred to in this Disclosure Document as Little Butterflies “the franchisor.” “You’’ means the person or entity who buys the franchise from Little Butterflies. Little Butterflies, a Texas Corporation was formed in August 2016 and does business under the names Little Butterflies learning center, Little Butterflies Academy and Little Butterfly Center North.

 

Little Butterflies maintains its offices at 2121 Rolling Oak In Garland Texas 75044

. Little Butterflies’ agent for service of process is disclosed in the Receipt attached to this Disclosure Document. Broadway has no affiliates that offer franchises in any line of business or provide products or services to franchisees of Broadway.

  • BUSINESS EXPERIENCE

 

Founder and CEO: Philip Brooks 

 

Mr. Philips Brook founded Little Butterflies in August 2016. He has over 7 years of experience in early childhood education. He played professional basketball overseas where he opened basketball camps for children during his time in different countries. Going overseas has helped him understand diversity, languages, and different cultures which is significant to Little Butterflies Learning Centers.

 

Owner and Director: Makedonka Brooks 

Mrs. Makedonka Brooks has been a director for over 4 years at one of our Little Butterflies. Mrs. Makedonka has a lot of experience which has been of importance in running this business. She received her bachelor’s degree in English education and has over 10 years experience in early childhood education. Mrs. Makedonka speaks German, Bosnian, Macedonian, and English. She helps Little Butterflies embrace diversity due to her strong background which involves living in a different country for over 20 years. Mrs. Makedonka arrived in the USA in May 2014 and began working as a infant teacher. She later became the owner and director of her own Little Butterflies.

 

Legal Management: Micah Brooks 

Mr. Micah Brooks became Little Butterflies legal manager in August 2016. Mr. Micah has a strong background in education and Law. Mr. Micah received his bachelors in Law (LLB) in May 2010 at Southern Methodist University. He also received his Juris Doctorate in law at New York University in May 2013.

 

Curriculum Manager: Herticine ware 

Mrs. Herticine Ware became our Pre-K teacher at one of our Little Butterflies in August 2016. Mrs. Herticine manages all the little butterflies weekly curriculums to make sure that all classrooms and schools are following their weekly assignments. She also makes Little Butterflies yearly curriculums for every location and trains the staff when needed.

  • LITIGATION

[Disclose the types of litigation that currently involves or previously involved the franchisor, the franchisor’s affiliates, predecessors, and/or individual management team embers identified in the business experience section]

 

If there are none,

 

No litigation is required to be disclosed in this disclosure agreement.

  • BANKRUPTCY

 

[Disclose whether or not the franchisor, the franchisor’s affiliates, predecessors, and/or individual management team members identified in the business experience section previously filed for bankruptcy.]

 

[If not, then this part shall be stated as follows]

No bankruptcy filings or proceedings are required to be disclosed in this Disclosure Document. 

  • INITIAL FEES 

[Disclose all upfront fees that a franchisee must pay before the franchisee opens the franchised business. The most common initial fees disclosed in this section include the initial franchise fee and other upfront pre-opening fees that may be paid to the franchisor such as fees for opening-inventory and equipment that must be purchased from the franchisor.]

 

You must pay an Initial Fee of $______________.  [Include all details]

  • OTHER FEES

[Disclose all other fees that a franchisee must pay to the franchisor throughout the terms of the franchise agreement. These fees typically include on-going royalties, brand development fund, marketing, technology, training, and other fees specific to the franchisor.]

 

Name of fee Amount Due Date Remarks

  • ESTIMATED INITIAL INVESTMENT

[The franchisor must include a low to high estimate of the estimated cost for a franchisee to establish and open the franchised business. This estimate must include everything from build-out costs to reserve capital for the first three months of operation. The biggest expenses relate to expenses related to building-out and equipping the franchised business.]

 

DESCRIPTION OF EXPENSE ESTIMATED RANGE OF COST  

(LOW-HIGH

 METHOD OF 

PAYMENT

 DUE DATE TO WHOM
Initial Fee $ The Franchisor[state name of the company]

  • RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

[Disclose what products and supplies the franchisee must purchase from the franchisor or the franchisor’s designated suppliers. Within this section of work, the franchisor (your company/business) must also disclose revenue and rebates that the franchisor earned from selling source-restricted supplies and products to franchisees.]

 

Obligationto Purchase or Lease Products or Services from Designated or Approved Suppliers

It is the obligation of the franchisee to…………………

 

Obligation to Purchase or Lease Products or Services under Franchisor’s Standards and Specifications

You must purchase or lease……………………….

  • FRANCHISEE’S OBLIGATIONS

[Disclose, in table format, the franchisee’s obligations under the franchise agreement. This table includes a summary of all legal obligations ranging from site selection and opening to default provisions and the franchisee’s obligations upon termination of the franchise agreement.]

 

OBLIGATION ARTICLES IN FRANCHISE AGREEMENT ITEM IN DISCLOSURE DOCUMENT
a) Site selection and acquisition/lease
b)Pre-opening purchases/leases
c) Site development and other pre- opening requirements
d) Initial and ongoing training
e) Opening
f) Fees
g) Compliance with standards and policies/Operating Manual
h) Trademarks and proprietary information
  1. Restrictions on products/services offered
j) Warranty and customer service requirements
k) Territorial development and sales quotas
l) Ongoing product/service purchases
m) Maintenance, appearance and remodeling requirements
n) Insurance
o) Advertising
p) Indemnification
q) Owner’s 

participation/management/staffing
r) Records and reports
s) Inspections and audits
t) Transfer
u) Renewal
v) Post-termination obligations
w) Non-competition covenants
x) Dispute resolution

 

If any part is not applicable, indicate (N/A) or remove it and add the applicable parts.

  • FINANCING

[Disclose whether or not the franchisor offers franchisees financing as to initial fees to be paid by the franchisor or in connection with the franchised business.]

 

  1. FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING.

[Disclose the type of assistance and training that the franchisor will provide to the franchisee, advertising requirements imposed on the franchisee, and the required computer and software systems that the franchisee will be required to purchase and utilize.]

  • TERRITORY

[Disclose if the franchisee will be awarded a protected territory, whether or not the territory is protected, how the territory will be determined, and instances where the franchisor reserves the right to operate within the franchisees territory.]

  • TRADEMARKS

[Disclose information about the trademarks of the franchise system, including, whether or not they are registered with the United States Patent and Trademark Office, their registration status, and whether or not the franchisor has notice of a trademark conflict or dispute.]

 

You are licensed to operate your business under the name [state the name that the franchisee should use]. You are also authorized to use the logos which appear on the cover page of this Disclosure Document. You may only use [Name of Company] Marks in the manner authorized in writing by [Name of Company]. The following is a list of the trademark and service mark registrations of [Name of Company] primary Marks on the principal register of the United States Patent and Trademark Office: 

 

MARK REGISTRATION NUMBER REGISTRATION DATE

 

All required affidavits have been filed. There are no presently effective determinations of the United States Patent and Trademark Office, the Trademark Trial and Appeal Board, the trademark administrator in any state or any court, no pending infringement, opposition or cancellation proceeding, and no pending material litigation involving the Marks which have limited or restricted the use of the Franchisor Marks in any state. 

 

There are no agreements currently in effect which significantly limit the rights of the Company to use or license the use of the Marks in any manner material to you. 

 

To the knowledge of the company, there are no infringing uses which could materially affect your use of the licensed Marks or other related rights in any state. You are required to provide the company with written notice of any claims made against or associated with the company’s Marks. The Company will protect your right to use the Marks and other related rights and protect you against claims of infringement and unfair competition with respect to the Marks. However, if anyone establishes to the Company’s satisfaction that its rights are, for any legal reason, superior to any of the Company’s Marks, then you must use such variances or other service marks, trademarks or trade names as the Company requires to avoid conflict with any superior rights. 

  • PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

[Disclose information about any patents, copyrights and other proprietary information that is related to the franchise system.

Does your company own any patents?]

  • OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

[Disclose what obligations, if any, the individual franchisees / franchisee owners must have in the day-to-day operations of the franchised business including whether or not they must work in the franchised business on a full time basis.]

  • RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL 

 

[Disclose its control over what a franchisee may or may not sell as a part of the franchised business.]

 

You may only sell the products and services specified or approved by [Name of Company] in writing……………..

[Add any other information relevant to this section]

  • RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

 

[Disclose and summarize the legal rights and obligations related to the renewal, termination, and transfer of the franchised business. This item must also include a summary as to how legal disputes must be resolved between the franchisor and franchisee.]

 

This table lists certain important provisions of the Franchise Agreement. You should read these provisions in the Franchise Agreement attached to this Disclosure Document. 

 

PROVISION ARTICLE IN THE FRANCHISE AGREEMENT SUMMARY
a) Length of Franchise Term
b)Renewal of extension of the term
c)Requirements for franchisee to renew or extend
d) Termination by franchisee
e)Termination by [name of company] without cause
f)Termination with cause
g) Franchisee’s obligations on termination/non-renewal
h) Assignment of the contract by Broadway
i) “Transfer” by franchisee – definition
j) Company’s approval of transfer by franchisee
k) Conditions of approval of transfer
l) Company’s right to first refusal to acquire franchisee’s business
m) Company’s option to purchase franchisee’s business  
n) Death or disability of franchise
o)Non competition covenants during the term of the franchise
p) Non-competition covenants after the franchise is terminated or expires
q) Modification of the agreement
r)Integration/merger clauses
s) Dispute resolution by arbitration or mediation
t) Dispute resolution by arbitration or mediation
u) Dispute resolution by arbitration or mediation

 

If any part is not applicable, indicate (N/A) or remove it and add the applicable parts.

  • PUBLIC FIGURES

 

[Disclose if there are any celebrities or other public figures that have been hired to promote the franchise system.]

  • FINANCIAL PERFORMANCE REPRESENTATIONS

 

[Disclose whether or not it is making any Financial Performance Representations and if it does, the franchisor must provide specific detail within this section of work.]

 

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document.  Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. 

  • OUTLETS AND FRANCHAISEE INFORMATION

 

[Disclose, in five separate tables, a summary of the franchised and corporate outlets over the prior three years and a projection as to future opening in the next year.]

 

Table No. 1 

SYSTEMWIDE OUTLET SUMMARY 

FOR THE YEARS ENDED DECEMBER 31, [STATE THREE SPECIFIC YEARS]

 

Outlet Type Year Outlets at the start of the year Outlets at the end of the year Net change

Franchised

Company Owned

Total outlets 

 

Table No. 2 

TRANSFERS OF OUTLETS FROM FRANCHISEES TO NEW OWNERS  

(OTHER THAN THE FRANCHISOR) 

FOR THE YEARS ENDED DECEMBER 31, 2005, 2006, 2007 

 

State  Year  Number of Transfers 
Total Outlets 

 

Table No. 3 

STATUS OF FRANCHISE OUTLETS 

FOR THE YEARS [state 3 specific years]

 

State

 year Outlets at the start of the year Outlets opened terminations Non-renewal Required by franchisor Ceased operations other reasons Outlets at the end of the year

Totals

 

Table No. 4 

STATUS OF COMPANY-OWNED OUTLETS 

FOR THE YEARS [state the years]

 

state

 year Outlets at the start of the year Outlets opened terminations Non- renewal Required by franchisor Ceased operations other reasons Outlets at the end of the year

totals

 

Table No. 5 

PROJECTED OPENINGS BY DECEMBER 31, 2008

State Franchise agreements signed but outlets not opened Project new franchised outlet in the next fiscal year Projecting company- owned outlet in next fiscal year

  • FINANCIAL STATEMENTS

[Disclose and include copies of the Franchisor’s Financial Statements.]

 

[Does the FDD Have to Include Audited Financial Statements?

Yes. As a part of FDD Item 21, the FDD must contain audited financial statements of the franchisor. However, in most states, for new franchisors that have not previously offered or sold franchises, there is a partial financial statement phase-in exemption wherein a start-up franchisor may initially issue its FDD with an unaudited opening balance sheet. However, many registration states do not recognize this phase-in process.]

  • CONTRACTS

[List and attach as an exhibit all contracts that a franchisee must sign with the franchisor. These contracts include a sample of the franchisor’s standard franchise agreement and related agreements such as a development agreement, site selection agreement, release agreement, and others.]

  • RECIEPT

[Include two copies of the receipt page. The receipt page is the page that a franchisee must sign to confirm and prove the proper disclosure and delivery of the FDD.

Within those states known as the franchise registration states, the FDD must be filed and registered with a state franchise examiner.]

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