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What Is a Franchise Disclosure Document (FDD)?

A Franchise Disclosure Document (FDD) is the legal document every franchisor in the United States must give a prospective franchisee at least 14 days before any agreement is signed or money changes hands. Its format is mandated by the Federal Trade Commission's Franchise Rule, and it exists for one reason: to put the facts about a franchise system in writing, in a standard order, before a purchase decision is made.

Word cloud of Franchise Disclosure Document terms: franchise, franchisor, franchisee, obligations, Disclosure Document, FDD

There are 4 sections in a Franchise Disclosure Document (FDD):

  • Cover Page
  • Table of Contents
  • Items 1–23
  • Exhibits

The document typically runs hundreds of pages and is updated at least annually. It contains 23 numbered items, always in the same sequence, which makes FDDs from different systems — and different years of the same system — directly comparable:

  1. The Franchisor and Any Parents, Predecessors, and Affiliates — who is behind the system and its corporate history
  2. Business Experience — the background of the executive team
  3. Litigation — material lawsuits involving the franchisor and its officers
  4. Bankruptcy — bankruptcy history of the company and its leadership
  5. Initial Fees — the franchise fee and other amounts paid before opening
  6. Other Fees — royalties, marketing fund contributions, technology fees, and more
  7. Estimated Initial Investment — the full cost table to open, from real estate to working capital
  8. Restrictions on Sources of Products and Services — what you must buy, and from whom
  9. Franchisee's Obligations — a reference table of your contractual duties
  10. Financing — any financing the franchisor offers or arranges
  11. Franchisor's Assistance, Advertising, Computer Systems, and Training — what support you actually get
  12. Territory — whether you receive protected territory and on what terms
  13. Trademarks — the marks you will operate under
  14. Patents, Copyrights, and Proprietary Information — other intellectual property
  15. Obligation to Participate in the Actual Operation of the Franchise Business — owner-operator requirements
  16. Restrictions on What the Franchisee May Sell — product and service limits
  17. Renewal, Termination, Transfer, and Dispute Resolution — how the relationship can end, and where disputes are heard
  18. Public Figures — celebrity involvement in the system
  19. Financial Performance Representations — the only place a franchisor may lawfully make earnings claims
  20. Outlets and Franchisee Information — unit counts, openings, closings, and franchisee contact lists
  21. Financial Statements — franchisor financial statements
  22. Contracts — the franchise agreement and every ancillary contract you will sign
  23. Receipts — your acknowledgment of delivery

Why read more than one edition?

Because franchisors must re-issue the FDD every year, consecutive editions show how a system is actually trending: fee increases, new litigation, unit closures, territory policy changes, and shifts in the earnings representations of Item 19. Comparing two or three years of filings is the fastest due-diligence exercise a prospective buyer, attorney, or analyst can run.

Every FDD on this site is the complete, unmodified document as filed — searchable, printable, and delivered as an instant PDF download after checkout.