Why a Franchise’s FDD is so Important
As with any business venture, investing in a franchise is not a decision that should be made lightly. Before deciding which market and business is right for you, it’s important to do your due diligence. And part of that due diligence is researching a franchise’s startup costs, earning potential, and requirements — all of which can be found in their Franchise Disclosure Document (FDD).
What is a Franchise Disclosure Document (FDD)?
Every franchise based in America must have a FDD — a legal document presented to interested franchisees that outlines all essential information about the franchise. Originally known as the Uniform Franchise Offering Circular (UFOC), FDDs are very detailed and should be reviewed carefully before a potential buyer signs any contracts.
Typically, a FDD includes:
- Information about the franchise and any partners, predecessors, or affiliates it has.
- An overview of the franchise’s executive team, as well as their experience with the business.
- The franchise’s litigation history.
- Whether or not the franchise or members of its executive board have recently filed for bankruptcy.
- The initial franchise fee.
- Additional costs relating to the franchise, like travel, training, permits, utilities, and safety equipment.
- The potential franchisee’s estimated total investment.
- Whether or not franchisees must (or may not) buy goods and supplies from certain vendors.
- Requirements of all franchisees.
- Territory franchisees are or are not allowed to expand to.
- Any trademarks the franchise currently holds.
- Patents, Copyrights, and Proprietary Information.
- An outline of which goods and services the franchisee is allowed to offer at their location.
- Information regarding the renewal, termination, repurchase, or transfer of a franchise agreement.
- Past financial performance.
- A list of current and former franchisees, as well as reasons behind why former franchisees terminated, canceled, or chose not to renew their contract.
- The franchise’s financial status and statements.
- Legal contracts.
- Acknowledgment of receipt.
At Camp Bow Wow, our Franchise Disclosure Document discusses this information in great detail. Once you’ve spoken with our Camp Bow Wow team about joining the brand and it looks like we’re likely to be a good fit for each other, we’ll send you a copy of the FDD. We’ll be happy to answer any questions you may have about the FDD and other investment information.
To receive your complimentary executive summary and learn more about franchise opportunities, fill out the form below or call us at (870) 600-2713.