Franchise Attorney in New York, New York
What is a franchise disclosure document (FDD)?
What is a franchise disclosure document (FDD)?
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well the fdd is as the name implies a
disclosure document and it includes 23
items of information
varying from the background of the
franchisor and the fdd is a document
that the franchisor must provide to a
prospective franchisee
you’ve got the background of the
franchisor litigation history
what all the costs and expenses are
going to be
what the franchisor is doing with
respect to how many units has it opened
what is it projecting that is going to
open it includes certified and audited
financial statements that the franchisor
has to include but a key key item is
what we call item 19 and that’s where
the franchisor has the the right not the
obligation but the right to provide
earnings information and projections so
that the franchisee or prospective
franchisee will have some idea what kind
of revenues and perhaps even
profitability that the franchisee can
expect
New York, NY franchise law attorney Richard L. Rosen discusses franchise disclosure documents (FDD). He explains that the FDD, or Franchise Disclosure Document, is exactly what the name implies—a disclosure document. It contains 23 items of information that a franchisor must provide to a prospective franchisee. These items cover the franchisor’s background, litigation history, projected and actual costs and expenses, the number of units opened, and future expansion plans.
The FDD also includes certified and audited financial statements. One of the most important elements is Item 19, where the franchisor has the right—though not the obligation—to provide earnings information and projections. This gives prospective franchisees insight into potential revenues and profitability they might expect from the franchise.
