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 franchisee at least 14 days prior to the contract 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 contract 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. 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. Receipts
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