FDD
Franchise Disclosure Document - a legal document that franchisors must provide to prospective franchisees at least 14 days before signing any agreement, containing 23 items of disclosure including fees, obligations, and financial performance representations.
Related Terms
Franchise Fee
A one-time upfront payment made by a franchisee to the franchisor to obtain the rights to open a franchise location, typically ranging from $25,000 to $50,000.
Royalty Rate
An ongoing fee paid by franchisees to franchisors, typically 4-8% of gross sales, in exchange for the right to operate under the brand and receive ongoing support.
Item 19
The section of the FDD where franchisors may provide financial performance representations, including average sales, costs, and profitability data. Not required but highly valued by prospective franchisees.