Franchise Disclosure Agreement

Often, once a future franchisee has muddled by reading the Disclosure Document (FDD) franchise – a long and complex undertaking – they may think that they understand the agreement in depth and only superficially scan the subsequent franchise agreement. They may consider these franchise agreements to be nothing more than liability contracts filled with a number of boiler plates and, therefore, they do not have to deal with what is in the agreement. Maybe it`s a tragic mistake. Buying a franchise is a complex investment. The information in a franchise disclosure document can help you choose. More information on franchising. B, such as “A consumer`s Guide to Buying a Franchise,” which can help you understand the use of a disclosure document, are available from the Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP or in writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C 20580. For more information, please visit the FTC homepage at

Call your state agency or go to your public library for other sources of franchising information. Be sure to read through each tax if the tax is due, the amount, and any related remarks/notes. It is strongly recommended that anyone who looks into a franchise speak to a franchise lawyer to better understand the remarks and notes related to each fee. A franchise publication document (FDD) is a legal document submitted to potential franchise buyers as part of the pre-sale procedure in the United States. It was originally known as the Uniforme Franchise Offering Circular (UFOC) before the Federal Trade Commission conducted revisions in July 2007. Franchisors became updated until July 1, 2008 to comply with the amendments. [1] Some brands expect you to operate your franchise as an active investment and may require the hiring of a General Manager or equivalent who has received special training to manage the business. The FDD provides comprehensive information on the role of both parties to the franchise – the franchisor and the franchisee – and should enable the potential franchisee to make an honest and informed decision about their investment in the business. The document explains how the investment will work in practice for the potential franchisee, which is essential, given that a franchise is another type of investment/activity.

If a public figure (for example. B an important athlete) is associated with the franchise, franchisors must disclose all agreements that have been made with the number in this article. This may include all performance or role obligations provided, as well as investment information. In addition to the number of units, this section will also provide instructions on the contact information of existing franchisees in the system as well as franchisees who have recently left the franchise. The chart may include fees such as pre-franchise/development fees, rental, bonds, insurance companies, insurance payments, equipment, training fees, professional fees, leasing enhancement, computer equipment/AV, signage, travel, additional resources, etc. Under the federal franchise rule, the DDF must be disclosed to a potential franchisee no later than 14 days before signing a franchise agreement or paying the money to the franchisor. Disclosure of the DDF alone is not enough; The 14-day period begins depending on when the franchisee signs the FDD document in FDD 23. Some states have changed this 14-day period. Learn more about the FDD`s revelation period. The code requires you to manage a disclosure document.

They are required to make a disclosure document available to a person who proposes to enter into, renew or renew a franchise agreement.