Franchise Glossary
FDD Item 21
What is FDD Item 21 in franchising?
The section containing the franchisor's audited financial statements, typically three years of balance sheets and income statements. Item 21 tells you whether the franchisor itself is financially stable. A franchisor with weak financials, declining cash reserves, or significant debt is a system-level risk: if the parent company struggles, support quality suffers and the brand's long-term viability comes into question.