Final answer:
The Federal Trade Commission (FTC) requires the seller of a franchise to provide the potential buyer with a Franchise Disclosure Document (FDD) and audited financial statements. The Securities and Exchange Commission (SEC) does not regulate franchise sales.
Step-by-step explanation:
The federal agency that requires the seller of a franchise to give the potential buyer a Franchise Disclosure Document (FDD) and audited financial statements is the Federal Trade Commission (FTC). The FTC is responsible for enforcing federal laws and regulations that protect consumers and promote competition in the marketplace.
As part of its mission, the FTC requires franchisors to provide prospective franchisees with a Franchise Disclosure Document (FDD) containing detailed information about the franchise, including audited financial statements. This disclosure document helps potential buyers make informed decisions about investing in a franchise.
The Securities and Exchange Commission (SEC) is a different federal agency that oversees the securities industry and regulates the buying and selling of stocks and other securities in the market. While the SEC requires companies to provide certain disclosures to investors, it does not specifically regulate franchise sales.