When must the notice be delivered?

Under the federal Franchise Rule (16 C.F.R. Part 436) the required disclosures must be provided and typically a 14-day waiting period observed before a franchise agreement is signed or a fee is paid; state rules can add requirements.

Can the notice be delivered electronically?

Yes—electronic delivery is permissible if the recipient consents and the method provides reliable access and retention consistent with ESIGN (15 U.S.C. ch. 96) and applicable state laws, such as UETA where adopted.

Is an electronic signature valid?

Electronic signatures are legally valid under the ESIGN Act and UETA when intent, consent, attribution, and record retention are satisfied; some states or transaction types may require additional steps or notarization.

Do states require registration?

Several states maintain franchise registration or filing regimes that add pre-sale or renewal filing obligations; requirements and fees vary by state, so consult state regulators or counsel before offering franchises there.

How long should records be retained?

Retain signed notices, audit trails, and related exhibits for multiple years after termination—follow federal retention baselines (e.g., tax records 3 years under IRC §6501(a)) and longer periods where industry rules apply.

What if I discover a material error after delivery?

Correct the disclosure promptly, notify affected prospects, and seek legal guidance; material omissions can expose the franchisor to rescission claims, penalties, or enforcement actions.

Electronic Signature
Templates
Legal
Franchise Disclosure Notice

Franchise Disclosure Notice

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

FRANCHISE DISCLOSURE NOTICE

This Franchise Disclosure Notice (the Notice) is provided by Franchisor Name: with principal place of business at Address: and is given to Franchisee Name: of Address: . The Effective Date of this Notice is .

RECITALS

WHEREAS, Franchisor has developed and uses a system for the operation of franchised outlets identified by a common mark and associated indicia and has made available to prospective franchisees certain disclosure information regarding the franchise offering; and

WHEREAS, Franchisee has requested and obtained from Franchisor the disclosures and information required by applicable franchise law necessary to evaluate the proposed franchise relationship and the parties intend to set forth certain notices, acknowledgments and terms regarding that disclosure in this Notice; and

WHEREAS, the parties desire to confirm receipt and acknowledgement of the disclosures and to record material terms of the proposed franchise offering prior to execution of a definitive franchise agreement.

NOW, THEREFORE

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. DEFINITIONS

For purposes of this Notice, the following terms have the meanings set forth below: "Franchise Agreement" means the definitive agreement by which Franchisee will be granted a license to operate a franchise under Franchisor's system; "Disclosure Documents" means the written materials, financial statements, and other documents provided by Franchisor to Franchisee in connection with the franchise offering.

2. NATURE OF DISCLOSURE

Franchisor represents that the Disclosure Documents delivered to Franchisee at or before the Effective Date identify known material facts regarding the franchise offering and include, without limitation, information regarding Franchisor's business experience, litigation history, bankruptcy history (if any), and a description of fees and estimated initial investment. The Disclosure Documents are provided for Franchisee's evaluation only and do not constitute an offer to sell a franchise independent of a signed Franchise Agreement.

3. ACKNOWLEDGMENT OF RECEIPT

Franchisee acknowledges receipt of the following items prior to signing any binding franchise instrument (check applicable boxes and provide dates where indicated):

Disclosure Documents Delivered:

Itemization Statement (initial fees and estimated initial investment)

Franchisor Financial Statements

Operations Manual (or summary of material obligations)

Date Disclosure Delivered to Franchisee:

4. FEES AND PAYMENTS

The principal fees and payments typically payable by Franchisee are described in the Disclosure Documents. For clarity, current amounts identified by Franchisor are:

Initial Franchise Fee Ongoing Royalty Advertising/Marketing Fund Contribution

5. CONFIDENTIALITY OF DISCLOSURES

Franchisee agrees to treat all Disclosure Documents and related confidential information as proprietary and confidential and not to disclose such information to third parties except to its legal, financial and business advisors who are bound to protect confidentiality. Franchisee shall use such information solely for the purpose of evaluating the franchise opportunity. Breach of this confidentiality obligation shall entitle Franchisor to injunctive relief in addition to any other remedies available at law or equity.

6. MATERIAL CHANGES

Franchisee acknowledges that any material changes to the Disclosure Documents that occur after delivery and prior to execution of a Franchise Agreement will be provided in writing by Franchisor. Material changes shall be described as follows:

Describe Material Changes (if any)

7. NO OFFER OR GUARANTEE

Nothing in the Disclosure Documents or this Notice constitutes a promise or guarantee of profit or of successful operation of a franchise. Estimates of investment and projected performance contained in the Disclosure Documents are estimates only and are not warranties. Franchisee understands and accepts the business risks inherent in operating a franchise.

8. RECORDKEEPING AND AUDIT

Franchisee shall maintain accurate books and records in accordance with generally accepted accounting principles and permit Franchisor or its designee to audit such records upon reasonable notice and during normal business hours, solely to verify compliance with the Franchise Agreement and the calculation of fees payable to Franchisor.

9. TRANSFERS; ASSIGNMENT

Any transfer or assignment of the proposed franchise rights by Franchisee prior to execution of a Franchise Agreement is subject to Franchisor's prior written consent. Franchisee acknowledges that proposed conditions and restrictions on transfer will be set forth in the Franchise Agreement.

10. NOTICES

All notices required under this Notice shall be in writing and delivered to the addresses set forth below (or to such other address as either party shall designate in writing).

Franchisor Notice Address Franchisee Notice Address

11. AMENDMENT; WAIVER; COUNTERPARTS

This Notice may be amended only by a writing signed by both parties. The waiver by either party of any breach shall not operate or be construed as a waiver of any subsequent breach. This Notice may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

12. GOVERNING LAW

This Notice shall be governed by and construed in accordance with the laws of the Governing State: without regard to conflict of law principles.

13. ENTIRE AGREEMENT; SEVERABILITY

This Notice, together with the Disclosure Documents identified herein, constitutes the entire agreement between the parties with respect to the subject matter and supersedes all prior oral and written communications. If any provision of this Notice is held invalid or unenforceable, such invalidity shall not affect the remaining provisions, which shall remain in full force and effect.

14. FRANCHISEE ACKNOWLEDGMENT

Franchisee certifies that: (a) Franchisee has received and read the Disclosure Documents described above; (b) Franchisee understands the terms of those documents and this Notice; and (c) Franchisee has had an opportunity to ask questions and obtain independent advice regarding the franchise opportunity.

Franchisee acknowledges receipt of Disclosure Documents prior to execution of any binding franchise agreement.

Date of Franchisee's Acknowledgement:

15. ADDITIONAL TERMS

Additional Provisions Agreed by the Parties

Franchisor:

Printed Name:

By:

Date:

Franchisee:

Printed Name:

By:

Date:

What a Franchise Disclosure Notice Is and when it applies

A Franchise Disclosure Notice (often delivered as part of a Franchise Disclosure Document or FDD) communicates key facts a franchisor must disclose to prospective franchisees before a sale. It typically summarizes fees, initial investment estimates, franchisor litigation and bankruptcy history, territory limitations, and financial performance representations. Under the federal Franchise Rule (16 C.F.R. Part 436), prospective franchisees must receive required disclosures and, in most cases, a 14-day waiting period before signing a franchise agreement or paying any franchise fee. Many states add registration or supplemental requirements.

Why providing a clear Franchise Disclosure Notice matters

A complete, timely disclosure reduces regulatory risk, supports informed decision-making by franchisees, and documents compliance with federal and state rules.

Who prepares and reviews a Franchise Disclosure Notice

The notice is prepared and delivered by franchisors and reviewed by prospective franchisees and their advisors.

Franchisors and executives responsible for disclosure and regulatory compliance.
Prospective franchisees and investors evaluating terms and financial projections.
Attorneys and compliance officers who confirm legal sufficiency and state registration status.

Legal counsel and compliance teams typically verify completeness, while operations and finance supply the factual details.

Typical signatories and reviewers

Franchisor — CEO

Franchisors sign or authorize the notice; they must ensure disclosures are accurate and up to date, and that required federal and state timelines are met before accepting payments or signatures.

Prospective Franchisee — Investor

A prospective franchisee reviews and signs after the waiting period; they should confirm financial disclosures, territory descriptions, and any contingencies before execution.

Core elements to include in a professional Franchise Disclosure Notice

A well-structured notice mirrors the FDD’s principal items and organizes material facts so a prospect can compare offers and make an informed decision.

Franchise Fees

Itemize initial franchise fees, recurring royalties, advertising contributions, and any other required payments with clear numerical values and billing frequency.

Initial Investment

Provide a realistic itemized estimate for equipment, inventory, training, leasehold improvements, and working capital, and clarify assumptions behind estimates.

Litigation & Bankruptcy

Disclose current and past material litigation or bankruptcy involving the franchisor or key principals, including nature and outcome where required.

Territory

Describe exclusive or protected territory terms, restrictions on multi-unit development, and conditions affecting territorial rights or encroachment.

Financial Performance

Where provided, include Item 19 style financial performance representations with period, sample size, and basis for the figures; avoid vague claims.

Financial Statements

Attach audited or reviewed financial statements required by applicable rules and indicate the reporting period and accounting standards used.

Step-by-step: preparing and delivering the Franchise Disclosure Notice

Follow these sequential steps to assemble, review, and provide disclosures in compliance with federal and applicable state rules.

01

Collect Source Data: Gather fee schedules, audited financials, litigation history, and territory maps from operations and finance.
02

Draft Notice: Populate the notice with complete items mirroring the required FDD sections and date each exhibit.
03

Legal Review: Have counsel verify compliance with 16 C.F.R. Part 436 and any state franchise laws before distribution.
04

Deliver and Track: Provide the notice to the prospect, document delivery method and date, and observe waiting periods before accepting funds.

Typical delivery and acceptance workflow for disclosure notices

A consistent delivery workflow creates an audit trail and reduces disputes about timing and consent.

Prepare Document: Assemble the FDD and disclosure notice as a single package with exhibits included.
Send Securely: Deliver via tracked email, secure link, or registered mail to document receipt and consent.
Acknowledge Receipt: Obtain written or electronic acknowledgment of receipt and record the timestamp.
Waiting Period: Observe any required waiting period before signature or payment is accepted and record compliance.

Configuring an online workflow for Franchise Disclosure Notices

Key workflow settings help ensure accurate delivery, signer authentication, and an auditable record of disclosure.

Field	Configuration
Document Package	Include the full disclosure bundle as one PDF to preserve page order and exhibit linking.
Authentication	Enable email verification and optional SMS or KBA for higher-assurance signer identity.
Consent Record	Add a consumer consent checkbox with a disclosure acceptance timestamp saved to the audit trail.
Reminders	Set automatic reminders and time-limited signing links to keep the process on schedule.

Technical considerations for electronic delivery and eSigning

Choose a platform that supports required file types, secure delivery, and reliable audit trails.

File Formats: PDF, DOCX, and HTML accepted
Integrations: Salesforce, NetSuite, Google Workspace
Security: TLS in transit, AES-256 at rest

Key timing rules and deadlines to observe

Observing these deadlines helps ensure regulatory compliance and reduces rescission or enforcement risk.

FTC Waiting Period:

Deliver disclosures and allow a 14-day waiting period before taking payment or signature (16 C.F.R. Part 436).

Material Change Update:

Provide updated disclosures promptly when material changes occur; timing varies with the scope of change.

State Registration Timelines:

Some states require pre-sale registration and notice filing; deadlines differ by jurisdiction and statute.

Audit Trail Retention:

Retain delivery and consent records to support compliance in audits or disputes.

Signature Validity Window:

Consider expiration on electronic signing links to prevent outdated acceptance outside the waiting period.

Common preparation mistakes to avoid

Incomplete Itemization: Omitting specified fees or failing to provide clear examples of recurring charges creates regulatory exposure and confusion for prospects.
Timing Errors: Providing the notice less than the required waiting period before obtaining signatures or payments can trigger rescission rights and enforcement action.
Inconsistent Figures: Mismatched investment estimates, contradictory exhibit numbers, or unreferenced assumptions undermine credibility and invite follow-up.
Poor Version Control: Sending different disclosure versions to different prospects without clear versioning increases litigation and administrative burden.

Penalties and legal risks of incorrect or late disclosures

FTC Enforcement: Civil penalties and injunctions can arise under the Franchise Rule.

Rescission Risk: Prospective franchisees may have grounds to rescind agreements for material nondisclosure.

State Penalties: State regulators may impose fines or deny registrations.

Civil Liability: Misrepresentations can lead to contract damages or fraud claims.

Operational Delay: Missing disclosures can delay openings and revenue recognition.

Reputational Harm: Public enforcement or litigation harms franchisor reputation and recruitment.

Supporting documents to include with the notice

Attach documents that substantiate disclosures so reviewers can verify claims without extra requests.

Audited Financials

Provide the franchisor’s audited or reviewed financial statements covering required reporting periods and notes.

Sample Agreement

Attach a complete sample franchise agreement showing terms referenced in the notice.

Territory Maps

Include maps, demographic data, or GIS exhibits that clarify territorial boundaries and market protection.

Itemized Cost Schedules

Supply detailed cost worksheets that support initial investment estimates and working capital assumptions.

Practical tips for accurate and efficient completion

Follow standardized practices to minimize errors, speed reviews, and maintain defensible records when distributing disclosure notices.

Standardize Templates and Versioning

Maintain a single canonical disclosure template with a clear version identifier, change log, and distribution checklist so every prospect sees the same information.

Document Delivery Audit Trail

Capture delivery timestamps, consent records, signer authentication events, and signed copies to demonstrate compliance with waiting periods and consent rules.

Use Clear Numerical Disclosure

Avoid vague ranges without explanation; present assumptions, low/likely/high scenarios, and the factual basis for any financial performance representations.

Coordinate Legal and Operational Teams

Involve counsel before updating disclosures, and centralize source data from finance and operations to reduce inconsistencies.

Real users describing electronic disclosure workflows

Organizations using electronic delivery report faster turnaround and clearer audit trails for regulated disclosures.

Optica Ventures LLC

The interface is simple and easy-to-use for our team; more importantly, it is just as easy for our customers.

Ease of use reduced back-and-forth with prospects.
The result was fewer document errors and a more consistent audit trail that supported faster decision-making.

Martin Properties

I can process and execute all of these documents online with 100% compliance and built-in security.

Mobile and offline signing supported field operations.
That flexibility helped close agreements faster while preserving records necessary for compliance and future audits.

eSignature vendor comparison for disclosure delivery

Basic pricing and feature comparisons for common eSignature vendors. Place signNow first in the header per guidance and use publicly reported starting prices.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by plan	Varies by plan	Varies by plan	Varies by plan
Bulk Send	Yes (Business Premium)	Yes	Yes	Yes	No
HIPAA Compliant	Yes	Yes	Yes	No	No
Envelope Cap	No cap	100 envelopes/user/yr	Varies by plan	Varies by plan	Varies by plan

Field-level workflow settings to enable for disclosures

Configure these fields to ensure each disclosure is complete, authenticated, and auditable within your eSignature platform.

Field	Configuration
Disclosure Date	Auto-fill with document effective date in MM/DD/YYYY format
Acknowledgment Checkbox	Require prospective franchisee to confirm receipt and understanding
Signer Role	Assign roles such as Prospective Franchisee, Franchisor Representative
Authentication	Set email verification; enable SMS or KBA when higher assurance required

Frequently asked questions about Franchise Disclosure Notices

Answers to common operational and legal questions about preparing, delivering, and retaining disclosure notices.

Need help? Contact support

When must the notice be delivered?
Under the federal Franchise Rule (16 C.F.R. Part 436) the required disclosures must be provided and typically a 14-day waiting period observed before a franchise agreement is signed or a fee is paid; state rules can add requirements.
Can the notice be delivered electronically?
Yes—electronic delivery is permissible if the recipient consents and the method provides reliable access and retention consistent with ESIGN (15 U.S.C. ch. 96) and applicable state laws, such as UETA where adopted.
Is an electronic signature valid?
Electronic signatures are legally valid under the ESIGN Act and UETA when intent, consent, attribution, and record retention are satisfied; some states or transaction types may require additional steps or notarization.
Do states require registration?
Several states maintain franchise registration or filing regimes that add pre-sale or renewal filing obligations; requirements and fees vary by state, so consult state regulators or counsel before offering franchises there.
How long should records be retained?
Retain signed notices, audit trails, and related exhibits for multiple years after termination—follow federal retention baselines (e.g., tax records 3 years under IRC §6501(a)) and longer periods where industry rules apply.
What if I discover a material error after delivery?
Correct the disclosure promptly, notify affected prospects, and seek legal guidance; material omissions can expose the franchisor to rescission claims, penalties, or enforcement actions.

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