What Is The Initial Investment (Item 7) In the Franchise Disclosure Document?

When making your disclosures in the franchise disclosure document (FDD), Item 7 will include information about the franchisee's initial investment. This should be an estimate of the total amount that a franchisee will have to pay the franchisor in order to commence business. In the FDD, these expenses will be listed in 7 different categories.

If you need assistance with your franchise disclosure document, you can get the professional help of a New York franchise attorney.

The 7 categories of expenses detailed in Item 7 of your FDD include: 

1. the initial franchise fee;
2. training expenses;
3. real property whether purchased or leased;
4. equipment, fixtures, construction, and decorating costs, whether purchased or leased;
5. initial inventory;
6. security deposits, business licenses, and other prepaid expenses; and
7. additional funds required by the franchisee before operations begin and during the initial phase of the franchise business. 

According to the Federal Trade Commission (FTC), these disclosures must be in chart form and include information regarding: 

• to whom the payments are made;
• when the payments are due;
• whether each payment is refundable; and
• whether any portion of the initial investment may be financed.  

A New York franchise attorney can assist you with the provision of these disclosures.

You can learn more about the requirements for a franchise disclosure document (FDD), by visiting our article library. 

How Can a New York franchise Attorney Help?

If you are an entrepreneur who is interested in franchising your business there is a lot you need to know, including the significance of evaluating your trademark and how to approach the preparation of your FDD. For a limited time, get New York franchise attorney Charles N. Internicola, Esq's franchise law report to determine whether or not your business is right for franchising. For more information about Mr. Internicola's franchise law services in New York and how he assists entrepreneurs franchise their business nationwide, contact us today at 1-800-976-4904.