A Franchise Disclosure Document (FDD) is a legal document that franchisors in the United States are required by law to provide to potential franchisees at least 14 days before they sign any franchise agreement or pay any money.
The FDD is a comprehensive document that contains information about the franchisor, the franchise system, and the terms of the franchise agreement.
The FDD typically includes 23 items of disclosure, including information on the franchisor’s background and business experience, the initial and ongoing fees that the franchisee will be required to pay, the training and support that will be provided to the franchisee, the restrictions and limitations on the franchisee’s operations, and the franchisor’s financial statements.
The FDD is intended to provide prospective franchisees with the information they need to make an informed decision about whether to invest in the franchise.