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What Is Disclosed in FDD Item 21 (Financial Statements)?

FDD Item 21 requires the disclosure of a franchisor’s 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. Your audited financial statements should include:

  • Balance Sheet;
  • Multi-Year Statement of Operations;
  • Shareholders' Equity Statement; and
  • Cash Flow Statements.

Learn more about Item 21, financial statements that you must include in your FDD and start-up franchisor phase-in exemptions.

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