What is an FDD?

The FTC or Federal Trade Commission is the regulatory body for franchising in the U.S. They require all prospective franchisees (buyers) receive a disclosure document called an “FDD” or Franchise Disclosure The FDD contains background information about the company and lists 23 items that cover just about everything you’d need throwback nba jerseys to know the franchise.

The 23 items:

  1. TheFranchisor- Provides the names of the franchisor, their predecessors and their affiliates.  It also states the aim of the franchisor’s business and their experience.
  2. Business Experience- Gives you information about the officers, directors and executives of the franchisor.
  3. Litigation History- States if there is any relevant criminal or civil litigation regarding the company or its management.
  4. Bankruptcy- States if the company or its managers have declared bankruptcy.
  5. Initial Franchise Fee- Contains the amount the franchisee must pay to acquire the franchise, and how the franchisor settled on this amount.
  6. Other Fees- Includes fees other than the initial franchise fee, including royalties, training fees, advertising contributions and transfer and renewal fees.
  7. The Initial Investment- Contains a table with payments the franchisee must make to ray ban sunglasses set up the business (including initial franchise fee, real estate, equipment and supplies, signs, advertising, capital, etc), as well as oakley outlet when and how to make these payments.
  8. Business Restrictions- States restrictions on suppliers, products, equipment, or services related to the franchise.
  9. The Franchisee’s Obligations- Includes wide-ranging information about what the franchisee is required to do.
  10. Financing- States whether or not the franchisor offers financing, and if so, terms will be included here.
  11. The Franchisor’s Obligations- Includes wide-ranging information about what the franchisor is required to do.
  12. Territory- States if the franchisee will be granted exclusive rights to a territory and whether the franchisor can set up another unit within it.
  13. Trademarks- Sets out the franchisor’s trademarks, service marks and trade names that will be used.
  14. Patents, Copyrights and Proprietary Kong Information- Contains information on which of these the franchisee may use, and how.
  15. Participation- States whether the franchisee must be a hands-on cheap mlb jerseys owner, or if they may be an absentee owner.
  16. Product or Service Restrictions- States the products or services the franchisee may sell.
  17. Renewal, Termination, Transfers and Dispute Resolution- Consists of a table that set the terms of the agreement- the length of the term, renewals, termination reasons, transfer rights and other items.
  18. Celebrities- Lists the names of any public figures that may be involved in the venture and the details of the celebrity’s agreement.
  19. Earnings Claims- Statement that contains what other franchisees have earned.  It is important to note that cheap nfl jerseys the franchisor is not required to provide an Earnings Claim and the salesperson is only authorized to state numbers that are disclosed in the FDD.  The salesperson, however, will assist the candidate in receiving this information from franchisees, through the due diligence process.
  20. Other Units in the System- Provides information about other franchisees, company-owned outlets, the estimated number of franchises to be sold in the next year and other information.
  21. Financial Statements- Provides audited financial statements of the franchisor for the past three years.
  22. Agreements- Includes the franchise agreement, and any other agreements.
  23. Confirmation- Contains a receipt that you must sign, which states that the franchisor provided you with the FDD.