Screen franchise sales statements against 16 CFR 436.9
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- List oral and written statements to the prospective franchisee, any financial performance figure, any disclaimer of the disclosure document, and any deposit-refund clause. Map each item to a paragraph of 16 CFR 436.9 for the lawyer. Do not rewrite the statements.
- What the lawyer must review
- 16 CFR 436.9 lists additional prohibitions for a franchise seller covered by Part 436. They include a claim that contradicts a required disclosure; a misrepresentation that a person bought or operated the franchise or can give an independent and reliable report; a financial performance representation without a reasonable basis, written substantiation, and inclusion in Item 19, together with the extra disclosures and the admonition that a new franchisee's results may differ; failing to make Item 19 substantiation available on reasonable request; the early-delivery and quarterly-update duties; presenting a materially different agreement without the seven-day notice in paragraph (g); disclaiming or requiring a waiver of reliance on a representation in the disclosure document or its exhibits or amendments; and failing to return funds or deposits as the disclosure document or the agreements describe. Paragraph (h) does not stop a prospective franchisee from voluntarily waiving specific contract terms during negotiations. These are conduct prohibitions. They are not a list of contract clauses the rule strikes out. The lawyer makes each call. ABA Model Rules 1.1 and 5.3 and Formal Opinion 512 leave that review with the lawyer.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes preparing preliminary structure or wording. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.
Related tasks
Draft or review a franchise disclosure document against the prescribed headingsCheck the franchisor's disclosure and any registration the jurisdiction requiresDraft or review a franchise agreement from the disclosure and the term sheetBuild a franchisee due-diligence issues list from the disclosure pack