Franchise Glossary
Franchise Disclosure Document (FDD)
What is Franchise Disclosure Document (FDD) in franchising?
A federally mandated document, typically 200–400 pages, that every franchisor must provide to prospective buyers before any agreement or payment. Organized into 23 items, it covers the franchisor's history, leadership, litigation history, fees, investment requirements, territory rights, franchisee obligations, financial performance data (Item 19), and a contact list of all current franchisees (Item 20). Reading the FDD, especially Items 5, 6, 7, 19, and 20, is one of the most important steps in franchise due diligence.