What information must be disclosed to potential franchisees?

In California, potential franchisees must receive a Franchise Disclosure Document (FDD) before signing any agreement with the franchisor. The FDD must be provided to the buyer at least 10 days before signing any contract, and it should provide detailed information about the franchise. It should include a description of the franchise, the franchisor’s background and financial statements, any litigation involving the franchise, and information about the franchise’s advertising materials and system. The FDD must also include the total costs associated with the franchise, and any restrictions on the franchisee’s control over the business. It should also describe any ongoing fees the franchisee will have to pay, such as royalty and advertising fees, and any restrictions on the franchisee’s right to transfer the franchise. Finally, the FDD should include a list of current and former franchisees, and a list of any pending or terminated franchises. This information will help the potential franchisee make an informed decision before signing an agreement.

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What information must be disclosed to potential franchisees?

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