What is the meaning / definition of Franchise Disclosure Documents?

The term Franchise Disclosure Document, also known under the acronym FDD, refers to a legal document implemented in 2008, in the US. It is used to fully inform potential franchisees about the investment. This document contains major information and has to be given to the at least 14 days prior to the signature. The FDD is part of the due diligence process each potential franchisee must undertake – thoroughly – before signing a franchise agreement.

The different points included in this are:

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. ’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  May Sell

17. Renewal, Termination, Transfer, and Dispute Resolution

18. Public Figures

19. Financial Performance Representations

20. Outlets and  Information

21. Financial Statements

22. Contracts

23. Receipts

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