Home / Glossary / Franchise Disclosure Document (FDD)
The Franchise Disclosure Document (FDD) is a legal document that franchisors are required by the FTC to provide to prospective franchisees at least 14 calendar days before any franchise agreement is signed. It contains 23 standardized items covering everything from the franchisor's background and litigation history to the full franchise agreement and audited financials.
Example
Before signing with a McDonald's franchise, the prospective franchisee receives the FDD which discloses that the estimated initial investment ranges from $1M–$2.3M, along with details on training, territory, and financial performance.
The Franchise Disclosure Document (FDD) is a legal document that franchisors are required by the FTC to provide to prospective franchisees at least 14 calendar days before any franchise agreement is signed. It contains 23 standardized items covering everything from the franchisor's background and litigation history to the full franchise agreement and audited financials.
Understanding Franchise Disclosure Document (FDD) is essential for anyone evaluating a franchise opportunity. It directly affects the financial structure, legal obligations, and operational expectations of the franchise relationship. Buyers who understand this term are better equipped to ask the right questions and negotiate favorable terms.
Franchise Disclosure Document (FDD) can significantly impact the total cost of ownership, ongoing profitability, and long-term value of your franchise investment. Before signing any agreement, you should review all disclosures related to Franchise Disclosure Document (FDD) with a qualified franchise attorney and financial advisor.
Sources: TheFranchiseBrowser editorial team (thefranchisebrowser.com); U.S. Federal Trade Commission — FTC Franchise Rule, 16 C.F.R. Part 436. Definitions are for informational purposes only and do not constitute legal or financial advice.