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What is the FDD Waiting Period?

It is the period of time a franchisor must wait before accepting money or signing a contract with a new franchisee. Under the Federal Franchise Rule, franchisors must disclose and deliver to their prospective franchisees the franchisors current FDD (Franchise Disclosure Document) at least 14 days prior to the prospective franchisee signing any binding agreement or paying any fee. If, during the negotiation period (after delivery of the franchisor's then current FDD) the Franchisor "unilaterally" and "materially" modifies the terms of the franchise agreement or other documents attached to the FDD then the franchisor must re-disclose the modified agreements and wait an additional 7 days. This redisclosure obligation and waiting period does not apply to modifications resulting from negotiations with the franchisee.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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