What Is the FDD Disclosure Period?
The franchise disclosure document (FDD) disclosure period is the period of time within which you must disclose your FDD to a prospective franchisee prior to that franchisee entering into any agreement with you or paying any fee to you. The following FDD disclosure rules and periods apply:
- What does it mean to disclose a FDD? – Disclosure means that you deliver a complete FDD to your prospective franchisee. The FDD must be delivered as one integrated document containing all exhibits and attachments, including your FDD receipt page.
- 14-Day Disclosure Period – Under the FTC’s Federal Franchise Rule, you must disclose your FDD to a prospective franchisee no less than 14 calendar days prior to the franchisee signing any agreement with you or your affiliate or paying any fee to you or your affiliate. The prospective franchisee should have the FDD for a full 14 days, which means you should not count the first day that you disclosed the FDD, and the franchisee cannot sign or pay any fee until the 15th day or later (i.e., after the full 14 days have expired). The date of this disclosure is determined by the date that the prospective franchisee signs on the FDD Item 23 receipt page.
Since this 14-day disclosure period is mandated by federal law, it applies in each and every state throughout the United States. However, Michigan, New York, Oregon, and Wisconsin also require that the FDD be disclosed 10 business days prior to the franchisee signing any agreement or paying any fee. New York specifically requires that the FDD be disclosed at the earlier: either 10 business days prior to the franchisee signing any agreement or paying any fee, or the date of the first in-person meeting between the franchisor and the prospective franchisee.
- 7-Day Disclosure Period – Under the FTC Federal Franchise Rule, in addition to the 14-day disclosure period, you must disclose your prospective franchisee with complete agreements (such as the completed franchise agreement, development agreement, addendum, etc.) prior to having the franchisee sign any agreement or pay any fee. This 7-day disclosure period may run simultaneously with the 14-day period and is based on calendar days. Since your form franchise and other agreements should have been originally disclosed to the franchisee as a part of your FDD, this additional 7-day disclosure period is designed to address additions and changes made to the franchise and other agreements that go beyond “fill in the blank provisions” such as entering dates and names. A limited exemption to this 7-day disclosure period applies to negotiated changes initiated by the franchisee and made by franchisor and franchisee.
You can disclose your FDD electronically. Learn more about electronic FDD disclosure.
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