Disclosure Document

Franchise Disclosure Document (FDD) is a legal document which is presented to prospective buyers of franchises in the pre-sale disclosure] process in the United States. Prior to revisions made by the Federal Trade Commission in July of 2007, the document was known as the Uniform Franchise Offering Circular or UFOC. Franchisors were given until July 1, 2008 to comply with the changes. 

Under the Franchise Rule, which is enforced by the Federal Trade Commission (FTC), a prospective franchisee must receive the franchisor’s FDD franchise disclosure document at least 14 days before they are asked to sign any contract or pay any money to the franchisor or an affiliate of the franchisor. The prospective franchisee has the right to ask for (and get) a copy of the sample franchise disclosure document once the franchisor has received the prospective franchisee’s application and agreed to consider it. The franchisor may provide a copy of its franchise disclosure documents on paper, via email, through a web page, or on a disc. 

Document Requirements

The document discloses extensive information about the franchisor and the franchise organization which is intended to give the potential franchisee enough information to make educated decisions about their investments. The information is divided into a cover page, table of contents and the following 23 categories called "Items":

  1. The Franchisor, It's Predecessors And Affiliates
  2. Business Experience
  3. Litigation
  4. Bankruptcy
  5. Initial Franchise Fee
  6. Other Fees
  7. Initial Investment
  8. Restrictions On Sources Of Products And Services
  9. Franchisee's Obligations
  10. Financing 
  11. Franchisor's Obligations
  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. Earnings Claims
  20. List Of Outlets
  21. Financial Statements
  22. Contracts
  23. Receipt