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A Franchise Disclosure Document includes 23 specific pieces of information (called items), the franchisors franchise agreement, and various exhibits (like a list of current and past franchisees, and audit financials of the franchisor.
Franchise agreements vary between different franchises, but these seven areas should be addressed in every franchise agreement. Use of Trademarks. Location of the Franchise. Term of the Franchise. Franchisee's Fees and Other Payments. Obligations and Duties of the Franchisor. Restriction on Goods and Services Offered.
The Franchise Rule requires the pre-sale disclosure of material information to prospective franchisees about the franchisor, the franchised business, and the terms and conditions that govern the franchise relationship.
What is included in the information statement. The information statement highlights issues to think about before becoming a franchisee. The information statement includes: the risks of franchising. doing research and due diligence.
Requirements for Item 23 of the FDD § 436.5(w), and they generally entail (1) a required preamble, (2) franchise seller information, (3) the issuance (or effective) date of the FDD, (4) a list of the FDD exhibits, (5) a signature block with room for the prospective franchisee to sign and date the receipt.
How is a Franchise Disclosure Document Structured? Item 1: The Franchisor, and any Parents, Predecessors, and Affiliates. Item 2: Business Experience. Item 3: Litigation. Item 4: Bankruptcy. Item 5: Initial Fees. Item 6: Other Fees. Item 7: Estimated Initial Investment. Item 8: Restrictions on Sources of Products and Services.
A Franchise Disclosure Document includes 23 specific pieces of information (called items), the franchisors franchise agreement, and various exhibits (like a list of current and past franchisees, and audit financials of the franchisor.
FDD and Me: What Are the 23 Franchise Disclosure Items? Item 1: The Franchisor. ... Item 2: Business Experience. ... Item 3: Litigation. ... Item 4: Bankruptcy. ... Item 5: Initial Fees. ... Item 6: Other Fees. ... Item 7: Estimate Initial Investment. ... Item 8: Restrictions on Sources of Products and Services.