What Is an FDD?
A Franchise Disclosure Document (FDD) is the legal document required by the Federal Trade Commission (FTC) under the Franchise Rule. It provides a prospective franchisee with essential and detailed information about the franchise opportunity, your company background, your business experience, your fees, and how your franchise system operates. This ensures every potential buyer can make an informed decision based on transparent and accurate facts, not assumptions.
The FDD is designed to set the foundation for a clear franchise relationship by outlining the legal obligations of both the franchisor and the franchisee. Every franchisor in the U.S. must provide this disclosure document before signing any franchise agreement or accepting fees. Providing the FDD correctly helps prevent legal disputes, supports compliance with applicable laws, and gives candidates the important information they need before investing in a franchise business or franchised business.
What the FDD Covers: A Complete Breakdown of All 23 Disclosure Items
Your FDD contains 23 required disclosure items that explain your history, your fees, your initial investment, your support, and the structure of your system.
These opening items disclose:
- Company identity and affiliates
- Executive business experience
- Litigation history
- Any bankruptcy events
This section outlines the main fees, payment obligations, and financial details a candidate should review, including:
- Initial franchise fee
- Royalties, brand fund, and other ongoing fees
- Initial investment range
- Supplier or purchasing restrictions
- Whether the franchisor offers financing
- Audited financial statement information
These items describe how your system works day-to-day and what the franchisee’s obligations include:
- Training, onboarding, and required computer systems
- Territory rights and constraints
- Franchisee obligations after opening
- Renewal terms, transfer rules, and dispute resolution processes
- Brand assets, intellectual property, and filings with the trademark office
- Copyrights, patents, and proprietary information
- Whether franchisees must operate the location themselves
- Restrictions on what franchisees may offer
- Any public figures involved in the promotion
This section ensures candidates understand the operational model of your franchise business.
These items help a buyer evaluate your system objectively:
- Optional franchise financial performance representation
- Historical openings, closures, transfers, and contact information for franchisees
These final items include:
- All agreements a franchisee must sign (including the franchise agreement)
- The receipt page confirming delivery of the FDD
This guarantees proper disclosure and documentation.
Quick Reference Table of All 23 Items
1–4
Background
Identity, affiliates, experience, litigation
5–7
Fees
Initial fees, franchise fee, and other charges
8
Restrictions
Purchasing and supplier rules
9
Obligations
Franchisor duties
10
Financing
Whether financing is offered
11
Training
Programs, systems, technology
12
Territory
Rights and geography
13
Trademarks
Registrations, IP, brand assets
14
IP
Patents, copyrights, proprietary tech
15
Participation
Franchisee operational requirements
16
Products
Sale restrictions
17
Renewal
Transfer, termination, disputes
18
Public Figures
Endorsements and involvement
19
FPR
System performance data
20
Outlets
System growth and closures
21
Financials
Audited financial statements
22
Contracts
All agreements
23
Receipt
Proof of disclosure
Faster Expansion With Invested Owners
Why Work With a Franchise Attorney
A qualified franchise attorney ensures your FDD:
- Complies with the FTC and state franchise laws
- Reflects how your system actually operates
- Contains accurate and complete disclosures
- Reduces risk of legal disputes
- Prepares your system for long-term growth
How the FDD Must Be Delivered
A franchisor must provide the FDD at least 14 calendar days before signing any agreement or accepting payment. If the contract is changed, an additional 7-day review period applies.
Providing timely and accurate disclosures ensures franchisees receive the important information they need before entering the franchise relationship.
Franchise Genesis
Build a Strong, Compliant FDD With Franchise Genesis
Your FDD shapes every future interaction with a candidate. It outlines the required fees, describes your operational expectations, explains your intellectual property, clarifies your support, and presents the structure of your franchise system. A strong FDD leads to a more confident franchise buyer and a healthier franchised business.
Franchise Genesis works with expert franchise attorneys to help build a compliant FDD that is easy for candidates to understand while meeting every regulatory requirement. Our process turns your concept into a clear, structured franchise model ready for expansion.
As part of our development process, Franchise Genesis shows you the benefits of franchising and how a well-structured FDD supports growth, confidence, and long-term system success. Our process turns your concept into a clear, organized franchise model ready for expansion.
Contact us today to build your compliant FDD and start your franchise journey.
Frequently Asked Questions
The document must be updated annually at the end of April each year and whenever material changes occur under state or federal applicable laws.
Yes. Required software, hardware, and any feature-driven development or platform-specific tech must be disclosed.
Most buyers focus on the initial investment, the fees, the franchise financial performance representation, the litigation history, and the operational requirements.
No. The FDD is the disclosure document that outlines all the obligations (for franchisee and franchisor) and costs for the franchise. The franchise agreement is the final, binding contract.