Is This FDD a Red Flag?
Answer 10 questions about your franchise's FDD. Get an instant risk score and specific explanations for every warning sign detected.
Does Item 19 show actual unit-level revenue figures?
Is franchisee turnover in Item 20 below 10% annually?
Does the franchise system have more than 50 active franchisee units?
Has the franchisor been in business for more than 5 years?
Does Item 3 show fewer than 3 pending or recently settled lawsuits?
Is the initial franchise fee below $50,000?
Does Item 21 show positive net income for the franchisor?
Is your territory protected or exclusive under Item 12?
Have you spoken with 5 or more existing franchisees independently (not referrals from the franchisor)?
Is the royalty rate below 8% of gross revenue?
How to Use This Quiz
This quiz is based on the 10 most predictive signals of franchise risk — drawn from the key items professional franchise analysts look at first. Each question maps directly to a specific FDD item or due diligence practice.
Before you answer, have a copy of the franchise's FDD in front of you. The FTC requires franchisors to provide the FDD at least 14 days before you sign any agreement. You can request it directly from the franchisor.
This quiz is a screening tool — not a substitute for full due diligence. Even a "low risk" score doesn't guarantee success. Every franchise investment should be reviewed by a qualified franchise attorney and evaluated against your personal financial situation.
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