The basics
The Franchise Disclosure Document is the legal document you must give every prospective franchisee at least 14 days before they sign anything or pay you anything. It has 23 required items covering your business, fees, obligations, territory rules, financials and the franchise agreement itself.
Why it matters more than the pitch
It's not paperwork to get past — it's the backbone of the sale. A candidate's attorney will read it line by line, and a weak or evasive FDD kills more deals than price ever does. It also has to be updated annually and registered in certain states before you can sell there.
The parts founders underestimate
- Item 19 — the only place financial performance can be shown. Full explainer here.
- Item 20 — your outlet tables: openings, closures, terminations and transfers, in public, every year. Your operating record becomes your sales record.
- State registration — several states require registration or filings before any selling activity. The 14-day clock and state rules bind everyone selling on your behalf.
Nothing here is legal advice — your FDD should be drafted by licensed franchise counsel. Our program build service coordinates the business terms alongside your attorney.