
Sample Franchise Disclosure Document FDD FranchisePrep Form


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People also ask
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What is the difference between a franchise agreement and a disclosure document?
The Franchise Disclosure Document (FDD) is a pre-sales disclosure document that provides franchise buyers with information about the franchisor, franchise fees, and opportunity. The Franchise Agreement is the legal agreement that creates a franchise relationship.
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What must be in a Franchise Disclosure Document?
Financial statements: A franchisor must provide three years of financial statements to the franchisee as part of the FDD. This includes balance sheets, statements of operations, owner's equity, and cash flows. Contracts: This is where the franchisor outlines the franchise agreement.
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How many items are in a FDD?
The FDD is divided into twenty-three sections or “Items”, each of which require a franchisor to disclose certain information to assist prospective franchisees in making a well-informed decision before investing in the franchise.
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What is an item 19 in franchising?
FDD Item 19 is the section of the Franchise Disclosure Document where franchisors must disclose their financial performance representations. If a franchisor elects to make a financial performance representation, it must be fully disclosed in Item 19 and must comply with federal and state franchise laws.
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What must be in a Franchise Disclosure Document?
Financial statements: A franchisor must provide three years of financial statements to the franchisee as part of the FDD. This includes balance sheets, statements of operations, owner's equity, and cash flows. Contracts: This is where the franchisor outlines the franchise agreement.
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What is the item 21 of the FDD?
Item 21 of the Franchise Disclosure Document (FDD) requires franchisors to disclose certain financial statements that reflect their financial condition. This requirement further assists prospective franchisees in the investment-decision-making process.
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What is Item 19 in a Franchise Disclosure Document?
Financial Performance Representations (FDD Item 19) Item 19 contains claims the franchisor chooses to make about sales or earnings. The Franchise Rule doesn't require a franchisor to provide that information, but most do. But here's the important thing: Any claims of that nature must be in Item 19.
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What is the 14 day rule for FDD?
14-Day Disclosure Period – Under the FTC's Federal Franchise Rule, you must disclose your FDD to a prospective franchisee no less than 14 calendar days prior to the franchisee signing any agreement with you or your affiliate or paying any fee to you or your affiliate.
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