FDD Item 11: Franchisor's Assistance, Advertising, Computer Systems, and Training Explained
Item 11 of the franchise disclosure document requires franchisors to disclose their principal assistance and related obligations to franchisees before and after opening. It covers pre-opening support, ongoing assistance, advertising, computer systems, training programs, and the operations manual. It is governed by 16 CFR 436.5(k).
What Is Item 11 of the FDD?
Item 11 covers the franchisor’s principal assistance obligations as set forth in the franchise agreement. For each obligation disclosed, franchisors must cite the specific section number of the franchise agreement that imposes it. The disclosure requirements are codified under 16 CFR 436.5(k) and enforced by the Federal Trade Commission.
Item 11 must begin with the following FTC-prescribed statement in bold type:
“Except as listed below, [the franchisor] is not required to provide you with any assistance.”
Only the assistance obligations listed in Item 11 and required by the franchise agreement should be relied on as required franchisor support. If a franchisor describes assistance that is not required by the franchise agreement, it should be clearly identified as discretionary and reviewed by counsel before inclusion.
Pre-Opening Obligations
Site Selection and Lease Negotiation: Franchisors must disclose any pre-opening obligations related to helping franchisees locate a site and negotiate the purchase or lease of that site. This includes assistance with site evaluation, approval criteria, and any involvement the franchisor has in lease negotiations.
Other Pre-Opening Assistance and Typical Opening Timeline: Item 11 must also disclose other pre-opening assistance the franchisor is obligated to provide including help with construction, build-out, and equipment installation. Item 11 must also disclose the typical length of time between signing the franchise agreement or making the first payment and opening the franchise business. Franchisors must describe factors that may affect this timeline such as site selection, permits, construction, and training.
Ongoing Assistance and Post-Opening Obligations
Franchisors must disclose the ongoing support they are obligated to provide after the franchise opens. Under 16 CFR 436.5(k) required disclosures include:
- Product and service development
- Hiring and employee training assistance
- Setting prices or pricing policies where applicable
- Administrative and operational support
- Resolution of operating issues
- Bookkeeping and recordkeeping assistance
Advertising Obligations
Item 11 must disclose the types of advertising assistance the franchisor is obligated to provide including media types, coverage areas, and whether the franchisor is required to spend any specific amount on advertising within the franchisee's territory. Franchisors must also disclose how the advertising fund is administered, who controls it, whether franchisees have input into spending decisions, and the percentage of advertising funds, if any, used principally to solicit new franchise sales.
Item 11 must also distinguish between national or regional advertising funded by the brand fund and local advertising obligations placed on individual franchisees. When both exist, each must be disclosed separately.
Computer Systems and Technology
Item 11 must disclose any mandatory computer hardware or software systems franchisees are required to use, including costs related to purchasing, leasing, maintaining, upgrading, or updating those systems. Item 11 must also disclose whether the franchisor has independent access to information generated by required computer systems.
Training Programs
Initial Training: The initial training program must be presented in a table titled "TRAINING PROGRAM" with columns covering subject, hours of classroom training, hours of on-the-job training, and location. Additional required disclosures include who must attend, instructor qualifications, duration of training, any charges beyond the initial franchise fee, and travel and living expenses the franchisee is responsible for.
Ongoing Training: Franchisors must also disclose any ongoing or refresher training obligations including frequency, whether attendance is required, format, and any associated costs.
The Operations Manual
Item 11 requires franchisors to disclose the table of contents of the operations manual, including the number of pages devoted to each subject and the total number of pages, unless prospective franchisees are given the opportunity to view the manual before buying.
The operations manual is one of the most significant indicators of a well-developed franchise system. A detailed manual signals the franchisor has invested in building a replicable system. A thin or incomplete manual is a red flag worth investigating during due diligence.
Common Mistakes Franchisors Make With Item 11
Item 11 is one of the sections franchisors most commonly struggle to complete accurately. Every assistance obligation must reference the franchise agreement section that imposes it. Missing citations create ambiguity and can lead to legal disputes.
Franchisors also commonly omit the percentage of advertising funds used to solicit new franchise sales, the typical opening timeline, and whether the franchisor has independent access to franchisee data through required computer systems.
Franchise Genesis
How Franchise Genesis Helps Franchisors Prepare Item 11
Item 11 is one of the most detailed and frequently incomplete sections in the FDD. Getting it right requires a thorough understanding of every assistance obligation in the franchise agreement and the ability to match each obligation to its corresponding contract section.
Franchise Genesis works with franchisors to prepare a franchise disclosure document that is accurate, compliant, and built to support franchise sales. Experienced franchise attorneys are included in the development program. They structure Item 11 disclosures correctly, confirm all obligations are captured and cited, and make sure training and operations manual disclosures reflect the actual system being delivered.
Contact Franchise Genesis to build an Item 11 that accurately reflects every assistance obligation in your franchise system and gives prospective franchisees a clear picture of the support they can expect.
Frequently Asked Questions
Item 11 requires franchisors to disclose their principal assistance and related obligations to franchisees before and after opening. It covers pre-opening support, ongoing assistance, advertising, computer systems, training, and the operations manual. It is governed by 16 CFR 436.5(k).
Franchisors must disclose any pre-opening assistance required by the franchise agreement including site selection, lease negotiation, construction guidance, and equipment installation. Item 11 must also disclose the typical timeline between signing and opening and the factors that may affect it.
Franchisors are generally required to provide the ongoing support required by the franchise agreement and disclosed in Item 11. The FTC-prescribed opening statement makes clear that no support beyond what is listed and required by the franchise agreement should be assumed.
Item 11 must include a training table titled “TRAINING PROGRAM” covering subject, hours of classroom training, hours of on-the-job training, and location. It must also disclose who must attend, instructor qualifications, duration of training, and any costs beyond the initial franchise fee.
Yes. Item 11 requires disclosure of the table of contents of the operations manual, including the number of pages per subject and total pages, unless prospective franchisees are given the opportunity to view the manual before buying.