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What is FDD Item 21?

Franchise Disclosure Document Item 21 is the mandated FDD Item section that requires the disclosure of a franchisors financial statements. As a general rule (subject to certain limited exceptions for start-up franchisors) franchisors are required to disclose and include audited financial statements for the three most recent fiscal years.

These audited financial statements, include:

  • Balance Sheet;
  • Multi-Year statements of operation;
  • Shareholders' Equity Statement; and
  • Cash Flow Statements
Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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