| Franchise Disclosure Document (FDD), formerly | | | | Item 6: Other Fees |
| called the Uniform Federal Offering Circular, | | | | Item 7: Estimated Initial Investment |
| (UFOC) provides prospective franchise investors | | | | Item 8: Restrictions on Sources of Products and |
| with information about a prospective franchise. | | | | Services |
| Company history, background information, risk | | | | Item 9: Franchisee’s Obligations |
| factors and financial statements are just a few of | | | | Item 10: Financing |
| the items covered. | | | | Item 11: Franchisor’s Assistance, Advertising, |
| To protect and inform the investor, the Federal | | | | Computer Systems and Training |
| Trade Commission (FTC) determined that a | | | | Item 12: Territory |
| standardized disclosure must be in place for | | | | Item 13: Trademarks |
| companies to offer their businesses as a | | | | Item 14: Patents, Copyrights and Proprietary |
| franchise. Because the format is standardized, it | | | | Information |
| makes for easy side-by-side comparisons | | | | Item 15: Obligation to Participate in the Actual |
| between companies. | | | | Operation of the Franchise Business |
| The FDD is provided to potential investors of | | | | Item 16: Restrictions on What the Franchisee May |
| franchises. Which means that this document is | | | | Sell |
| usually given to prospective investors who have | | | | Item 17: Renewal, Termination, Transfer and |
| made efforts to qualify for any particular | | | | Dispute Resolution |
| franchise. Usually a dialog has been established | | | | Item 18: Public Figures |
| between the investor and the franchisor before | | | | Item 19: Financial Performance Representations |
| the FDD is requested. | | | | Item 20: Outlets and Franchisee Information |
| Regarding the format of the FDD. It consists of | | | | Item 21: Financial Statements |
| cover pages, table of contents, main body and | | | | Item 22: Contracts |
| exhibits. | | | | Item 23: Receipts |
| The cover pages are straight-forward. They | | | | In addition, there may be a number of Exhibits. |
| contain the name, address, contact information | | | | These may include: |
| and basic business information. It also stresses | | | | List of State Agencies/Agents for Service of |
| how the FDD should be used and where to go for | | | | Process |
| additional help. There is also a state cover page | | | | Franchise Agreement with Exhibits |
| which informs the investor that there may be | | | | Financial Statements |
| state franchise laws. Additionally there is a | | | | Lease |
| paragraph on Risk Factors. This area points out | | | | Collateral Assignment of Lease |
| potential risks inherent in the particular investment. | | | | Operations Manual |
| The table of contents simply list out the items | | | | List of Franchisees, Current and Former |
| that make of the body and exhibits of the FDD. | | | | Release |
| The main portion of the FDD is comprised of | | | | Assignment of Franchise Agreement |
| twenty-three items. | | | | State Addendums |
| Item 1: The Franchisor and any Parents, | | | | Spousal/Partner Consent |
| Predecessors and Affiliates | | | | To be able to invest in any franchise business, |
| Item 2: Business Experience | | | | you will be required to have received the FDD. By |
| Item 3: Litigation | | | | familiarizing yourself with the format, you will have |
| Item 4: Bankruptcy | | | | a better understanding of the franchise purchase |
| Item 5: Initial Franchise Fee | | | | process. |