What follows is a capsule summary of the items found in every Franchise Disclosure Document, regardless of the type of industry. With each item I will review:
Content: An abbreviated summary of the factual contents found within Items 1 – 23, as defined in the FTC’s Guideline document.
Purpose: Discussion of why this passage exists and why the information is important to you
Tips & Advice: General information on how to interpret the information, or what the information means to you in practical terms and/or why it is significant.
Please keep in mind this information is directional in nature. Each franchisor will be unique; therefore you will have to use your own judgment as you interpret the specific information found in a given franchisor’s disclosure document.
Item 1: The Franchisor, Its Parents, Predecessors and Affiliates
Item 7: Estimated Initial Investment
Item 8: Restrictions on Sources of Products and Services
Item 9: Franchisee’s Obligations
Item 11: Franchisor’s Assistance, Advertising, Computer Systems and Training
Item 14: Patents, Copyrights and Proprietary Information
Item 15: Obligation to Participate in the Actual Operation of the Franchise
Item 16: Restrictions on What the Franchisee May Sell
Item 17: Renewal, Termination, Transfer and Dispute Resolution
Item 18: Arrangements with Public Figures
Item 19: Financial Performance Representations
Item 20: Outlets and Franchisee Information