Reviewing a franchise disclosure document (FDD) is an important part of the due diligence process for anyone considering purchasing a franchise. Here are some key things to look for when reviewing an FDD:
- Franchisor information: The FDD should provide detailed information about the franchisor, including its history, management team, and financial performance.
- Franchise fees and royalties: The FDD should outline all fees and royalties that the franchisee is required to pay, including initial franchise fees, ongoing royalties, and advertising fees.
- Territory restrictions: The FDD should specify the territory in which the franchisee is authorized to operate, as well as any restrictions on the franchisee’s ability to open additional locations.
- Training and support: The FDD should describe the training and support that the franchisor provides to franchisees, including initial training and ongoing support.
- Franchisee obligations: The FDD should outline the obligations of the franchisee, including requirements related to marketing, operations, and quality control.
- Litigation history: The FDD should disclose any litigation that the franchisor has been involved in, as well as any legal disputes between the franchisor and its franchisees.
- Financial performance representations: The FDD may include information about the financial performance of existing franchise locations, although this information is not required.
- Renewal and termination: The FDD should outline the terms of the franchise agreement, including renewal and termination provisions.
- Other disclosures: The FDD may include other disclosures required by law, such as information about trademarks and intellectual property, or any other material information that could impact the franchisee’s decision to purchase the franchise.
It is important to review the FDD carefully and to seek advice from a qualified attorney or other professional before making a decision to purchase a franchise. Contact our team of franchise lawyers now for a consultation by calling 1-877-892-7778 or emailing firstname.lastname@example.org.