Franchise Disclosure Document (FDD)
A Franchise Disclosure Document (FDD) is a legal document that provides potential franchisees with essential information about a franchise offering. It includes details about the franchise company's history, financial performance, fees, and obligations, as well as information about the support provided to franchisees. The FDD helps prospective franchise owners make informed decisions by ensuring they understand the franchise's risks and benefits before signing any agreements. In many countries, franchisors are legally required to provide an FDD to protect franchisees and promote transparency in the franchise relationship.
Additional Insights
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A Franchise Disclosure Document (FDD) is a legal document that franchisors are required to provide to potential franchisees before they invest in a franchise. It contains crucial information about the franchise, including the company’s background, fees, obligations, financial performance, and the rights and responsibilities of both parties. The FDD helps prospective franchisees make informed decisions by offering transparency about the business opportunity, including any risks involved. It typically consists of 23 items and must be updated annually, ensuring that potential franchisees receive current and accurate information.