What in the World is a FDD?

What in the world is an FDD?? I mentioned it last week when we were talking about the four step research process, but I want to dive in and really explain what that is. As you look at franchising, you're going to hear the term FDD quite a lot. That's an acronym for Franchise Disclosure Document.?

Franchise Disclosure Document

Every franchisor is required to publish a franchise disclosure document. This is a legal document, because franchising is actually regulated by the FTC to provide protection to you, the consumer, of the purchase of a franchise.?

In the Franchise disclosure document, you are going to find a wealth of information about the franchisor and the partnership you are about to embark on. You are going to find everything about the management team, their background, their experience, and why they're qualified to train and support you in that particular franchise concept.? You're going to also find information about the territory you'll be granted.?

Information on Expenses

Information about operating expenses can be found in Items 6 and 7.? Item 7 will outline your total estimated initial investment. Can you imagine going into business and being able to predict what your expenses might look like, because somebody else already did this before you?? It’s a great piece of the FDD to take a look at.?

Training Programs and Revenue

As you're exploring franchise opportunities, you're also going to find information in the FDD about the training program that you'll embark on and the details related to that.? You will find information on the revenue generated by other franchisees. We call this item 19. It's a financial performance representation, and every franchise reports their details in this section a little bit differently.?

But what it allows you to do is see what the capabilities are for income and revenue for a particular franchise. So the FDD really is a great document to take a look at.?

If you're researching franchises, thought about franchising, or wondered what an FDD is, just give me a call. We can talk through some of the various sections and information provided. I'm happy to guide you through that.