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Does a Franchisor Need to Disclose in its FDD Negotiated Changes Made To a Franchise Agreement?

Yes - especially with regard to FDD Items 5 and 6. FDD Items 5 and 6 require disclosure of the franchisees "initial fees" (including the upfront franchise fee) and "other fees" (including recurring royalty fees, marketing fund fees, transfer fees and others). To ensue consistency with the disclosures contained in Items 5 and 6, franchisors are required to disclose "variations" in the initial and ongoing fees that the franchisor is willing to negotiate or has negotiated in the prior fiscal year.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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