What are the requirements for franchise disclosure documents?

A Franchise Disclosure Document (FDD) is a disclosure document that must be provided by the franchisor to potential franchisees that outlines the key information about the franchise opportunity. In California, the requirements for Franchise Disclosure Documents must meet the Federal Trade Commission’s Franchise Rule, as well as any additional requirements set forth by the Franchise Investment Law. Franchise Disclosure Documents must contain 23 items, including an in-depth description of the franchise opportunity, the franchisor’s business background, any litigation the franchisor has been involved in, any bankruptcy filings, the franchisor’s obligations, the franchisee’s obligations, information about fees, costs, the term of the agreement, and the franchisor’s financial performance history. Franchise Disclosure Documents must also provide a list of current franchisees, as well as a copy of the franchise agreement. Franchise Disclosure Documents must be provided to potential franchisees at least 10 days prior to the signing of the franchise agreement, and must be updated and re-filed with the California Department of Business Oversight every year. The Franchise Disclosure Document must also be provided to the franchisee in a clear, easily understandable form. This document is key to understanding the franchise opportunity and should not be overlooked.

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What are the requirements for franchise disclosure documents?

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