Reviewing the Franchise Disclosure Document | Internicola Law Firm

Reviewing the Franchise Disclosure Document

If you are buying a franchise, reviewing the franchise disclosure document (also called the “FDD”) is a critical first step in your due diligence process. The FDD is a legal disclosure document that franchisors must provide to you not less than 14 days before you sign a franchise agreement or pay any money to the franchisor.  Required by federal law, the FDD contains 23 disclosure sections (each section is called an “item”) that contains detailed information about the franchisor, the franchise system and the franchise opportunity that you may be buying into. In addition to the franchise investment disclosures contained in the FDD, the FDD also includes a copy of the franchise agreement and other legal documents that you will be required to sign when you become a franchisee.

Before investing in a franchise or paying any money to a franchisor, you should review the FDD with an experienced attorney. Below we outline the 23 disclosure sections / items contained in a FDD and we provide a breakdown of what you should expect to find in each section.

Every FDD must include information about the following 23 disclosure items:

 

Keep in mind that the accuracy of the  information reported by a franchisor in its FDD is not verified by any government agency. So, while reviewing the FDD is a critical step in buying a franchise, its not the only step.

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