What is a franchise disclosure document?

In accordance with federal law, every franchisor in the United States is mandated by the Federal Trade Commission to provide a Franchise Disclosure Document (FDD) to potential franchisees. FDDs are generally revised annually and consist of 23 Items that detail the background of the company, past legal proceedings and bankruptcy filings, all expenses and charges related to the opportunity, initial startup costs, contractual responsibilities, and financial data for individual units or the entire system, alongside other vital details about the franchisor, its affiliates, and top management.