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Franchise Disclosure Document

Uniform Franchise Disclosure Document (UFDD) commonly referred to as FDD, is a legal document which is presented to prospective franchisees in the pre-sale disclosure] process in the United States. Prior to revisions made by the Federal Trade Commission (FTC) 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 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 receive 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.

Franchise Disclosure Document Content

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 sections 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
The following Exhibits to the Franchise Disclosure Document are also required and prepared by counsel:
  • Deposit Agreement
  • Confidentiality & Non-Competition Agreement
  • Development Agreement
  • Site Selection Addendum (if required)
  • Agreement With Landlord (if required)
  • Telephone Number & Directory Advertising Assignment Agreement
  • Operations Manual Table of Contents
  • Franchisee Closing Questionnaire
  • List of State Administrators
  • List of State Agents for Service of Process
  • State Specific Addenda to the Disclosure Document
  • State Specific Addenda to the Franchise Agreement
  • List of Franchisees if not contained in Item 20
    - Franchisee list must include the name, address and phone number of ALL Franchisees including ALL those "Franchisee Who Have Left the System" during the most recently completed fiscal year.

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