FDD (Franchise Disclosure Document)

The Franchise Disclosure Document (FDD) is required by the Federal Trade Commission. Before you can sign a franchise agreement, the franchisor must hand you this document and give you at least 14 days to read it. It is the single most honest picture of a franchise you will ever get, because lying in it is a federal matter.

It is organized into 23 standard sections called "Items." The ones buyers care about most: Item 5 (the upfront franchise fee), Item 6 (ongoing royalties and other fees), Item 7 (total estimated cost to open), Item 19 (financial performance — what existing units actually earn, if disclosed), and Item 20 (how many outlets opened and closed). Several U.S. states make franchisors file their FDDs publicly, which is where our data comes from.