Franchise Disclosure Document (FDD)

A Franchise Disclosure Document (FDD) is a legal document that franchisors must provide to prospective franchisees before any franchise agreement is signed or any payment is made. Required by the Federal Trade Commission (FTC) under the Franchise Rule (16 CFR Part 436), the FDD contains 23 specific disclosure items covering the franchise system's business model, fees, litigation history, financial performance, and contractual obligations. The document must be updated annually and provided to prospective franchisees at least 14 days before any agreement is executed.