The Franchise Disclosure Document (FDD) can make or break a potential
franchise. The Federal Trade Commission requires each franchisor to provide the
FDD at least 14 days before the franchise agreement can be signed.
Full disclosure is necessary, as franchisors for obvious reasons hold more
power in this business relationship. A franchisee should be made aware
of all potential scenarios and possible outcomes before delving into an
What Are Some Examples?
A franchise disclosure essentially alerts a franchisee to information that
cannot be easily found on his or her own. As an example, full disclosure
should include a list of the fees to start up the franchise and the fees
that must be paid to the franchisor to begin the enterprise.
Other topics that the FDD must discuss could include:
- Royal payments
- Fees for advertising
- Limits on the types of products sold
- Restrictions on how business is operated
- Standards of appearance
- Any additional contractual obligations
There are many items over which a franchisor can still retain control,
even the length of years permitted to franchise. If the franchisee fails
to hold up to these terms of the contract, then the franchisor can cancel
the contract or refuse to allow the franchisee to renew. It will be up
to the franchisor’s discretion. Furthermore, if the franchisee finds
that the franchisor has not offered full disclosure on some items, then
the franchisee may be able to rescind the contract. Again, it is best
that you consult with an attorney first so that you know what to expect
at the onset.
We Can Address Your Legal Concerns—Call Us!
Our Los Angeles franchise attorney at Franchise Legal Support offers legal
counsel for all types of franchising matters. If you are considering whether
or not franchising is right for you, we urge you to contact us to discuss
your options. We can help you stay one step ahead so that you can avoid
any pitfalls along the way.
Contact Franchise Legal Support today and request your