A Guide to the Franchise Disclosure Document | VetCor

There are a lot of terms to remember as you research franchises, but one of the most important things to be informed about is the Franchise Disclosure Document (FDD). This will contain nearly everything you need to know about a franchise brand before you buy it, so you can do your due diligence before solidifying your investment.

If that sounds overwhelming, don’t worry! We have a handy guide for you:

What Is a Franchise Disclosure Document?

An FDD is a document provided by the franchisor to every potential franchisee. In it, you will find nearly everything there is to know about the franchise brand and the legal details regarding your investment.

When You Will Receive Your Franchise Disclosure Document

Franchisors are required to present the FDD to franchisees 14 days before the franchise agreement is signed, at minimum. It must be written in understandable language and contain a specified 23-section collection of information.

The Sections of a Franchise Disclosure Document

As we mentioned, the FDD must contain the outlined 23 sections of information about the franchise brand. These sections cover five basic topics:

1. The Franchise Identity (Section 1–4). The first four sections are your guide to the franchise brand as a whole, those who are affiliated with it and any parent companies, if applicable.

2. The Franchise Financials (Section 5–9). Everything you need to know about the cost of the franchise and all the fees involved will be in these sections. This includes ballparks for low and high investment amounts, and details the royalties, advertising, technology and any other applicable fees that you may incur.

3. The Franchisee Perks (Section 10–18). This section goes over what the franchisor provides to the franchisee as part of the agreement. This will discuss your training, ongoing support and any other benefits that are included in the fees you pay to the franchisor.

4. The Franchisor’s Health (Section 19–21). This section provides an overview of the business as a whole, so franchisees understand the current financial health and the opportunity for growth involved.

5. The Legal Details (Sections 22–23). These sections contain any important legal considerations that are included in the agreement. It is best to work with a franchise lawyer to go over these sections so that you are able to make a fully informed decision.

If you’d like to learn more about our franchise opportunities, contact us today! We’re happy to answer questions about the FDD or any other inquiries you may have.