Franchise Disclosure Document - general contents

All franchise investigations involve some guesswork and judgements about the Franchisor, and should involve some killer due diligence. In this regard, the franchisor eliminates some of the guesswork and provides basic information about itself and the opportunity it offers. The FDD discloses:

•       The identity and business experience of its officers, directors, and key managers
•        Its litigation history (check out Subway and Quizno’s!), current non-compliant franchisees
•        Prior bankruptcy of the franchisor and its officers and directors
•        The amount of initial payments to the franchisor
•        A description of on-going payments to the franchisor, franchise term
•        The obligation of the franchisee to purchase goods and services from the franchisor or its affiliates
•        Financing arrangements if any
•        Restrictions on products and services the franchisee may sell
•        Exclusive or nonexclusive territory
•        The conditions under which the franchisor may repurchase the business, permit renewal of the use license, grant the   transfer of the license to a subsequent purchaser, and terminate the contract
•        Leasing and subleasing of Real Estate by franchisee prospect
•        Trademarks, tradenames, copyrights, patents, etc.
•        Arrangements with public figures
•        Training provided to the franchisee, topics covered
•        Assistance in site selection, lease negotiations, construction, equipment responsibilities
•        Information about existing and former franchisees
•        The franchisor’s financial condition
•        Projection of profits and earnings claims if the franchisor chooses to show this

This is partial but substantial list and not all FDD's are exactly the same.

To get more information about this topic, contact me , or attend a teleseminar....800-401-6424