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What Is a Franchise Disclosure Document?

A franchise disclosure document ("FDD") is a legal disclosure that a franchisor must provide to franchisees before offering or selling a franchise. The contents of the FDD are comprised of 23 disclosure topics required by federal and state law. The method by which an FDD is prepared, updated, and disclosed to franchisees is regulated by federal and state franchise laws. In certain states, the FDD must be registered with an agency state regulator prior to offering or selling franchises in that state.

The topics for the 23 disclosure items of an FDD include:

  1. The Franchisor and Any Parents, Predecessors, and Affiliates
  2. Business Experience
  3. Litigation
  4. Bankruptcy
  5. Initial Fees
  6. Other Fees
  7. Estimated Initial Investment
  8. Restrictions on Sources of Products and Services
  9. Franchisee's Obligations
  10. Financing
  11. Franchisor's Assistance, Advertising, Computer Systems, and Training
  12. Territory
  13. Trademarks
  14. Patents, Copyrights, and Proprietary Information
  15. Obligation to Participate in the Actual Operation of the Franchise Business
  16. Restrictions on What the Franchisee May Sell
  17. Renewal, Termination, Transfer, and Dispute Resolution
  18. Public Figures
  19. Financial Performance Representations
  20. Outlets and Franchisee Information
  21. Financial Statements
  22. Contracts
  23. FDD Receipt Page

Click here to learn more about the FDD, how it is regulated, and why it’s a blueprint for your franchise system.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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