Final answer:
The Federal Trade Commission (FTC) requires the seller of a franchise to give the potential buyer an offering circular and audited financial statements as part of its efforts to ensure transparency and protect buyers from fraudulent information.
Step-by-step explanation:
The federal agency that requires the seller of a franchise to give the potential buyer an offering circular and audited financial statements is the Federal Trade Commission (FTC).
The FTC is a government agency that deals with issues related to the economic life of Americans, including consumer protection and fair business practices.
The requirement for the seller of a franchise to provide an offering circular and audited financial statements is part of the FTC's efforts to ensure transparency and protect potential buyers from fraudulent or misleading information.
For example, the FTC's Franchise Rule requires franchisors to provide potential buyers with a disclosure document, often referred to as an offering circular, which contains important details about the franchise opportunity.
This document helps potential buyers make informed decisions and assess the risks and potential benefits of investing in the franchise.