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Checklist 4 of 10
Reviewing the Franchise Disclosure Document (FDD)
The most important document in the entire process — read every word.
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Confirmed I received the FDD at least 14 calendar days before signing anything
Confirmed I have NOT paid any fees or signed anything before the 14-day period
Printed or saved a complete copy of the FDD for personal annotation
Identified and engaged a qualified franchise attorney to review with me
Items 1–4: Background & history
Item 1: Confirmed franchisor legal name, state of incorporation, years in business
Item 1: Noted how long the company has been franchising vs. how long it has operated
Item 2: Reviewed all executives' backgrounds — noted any concerning history
Item 2: Assessed whether leadership has relevant operational experience
Item 3: Read ALL litigation disclosures — noted the nature and pattern of any suits
Item 3: Distinguished between franchisee lawsuits vs. unrelated business disputes
Item 4: Checked for any bankruptcies — understood the circumstances if present
Items 5–9: Fees & obligations
Item 5: Listed every initial fee and what each one covers
Item 5: Confirmed whether any fees are refundable and under what conditions
Item 6: Calculated the TOTAL ongoing fee percentage (royalty + marketing + tech fees)
Item 6: Listed every possible fee I could ever be charged under the agreement
Item 7: Built my own investment model using the Item 7 table
Item 7: Used the MIDPOINT range — not the low range — for planning purposes
Item 7: Verified Item 7 numbers against what actual franchisees report spending
Item 8: Identified all required vendors and sourcing restrictions
Item 8: Assessed whether required sourcing is competitively priced
Item 9: Read the complete list of franchisee obligations
Items 10–14: Territory & intellectual property
Item 10: Reviewed any franchisor financing offered — compared to market alternatives
Item 11: Read EVERY obligation the franchisor commits to providing me
Item 11: Will verify Item 11 promises against franchisee reports during validation
Item 12: Confirmed whether my territory is EXCLUSIVE or merely protected
Item 12: Identified all carve-outs — online sales, company units, alternative channels
Item 12: Confirmed the geographic definition of my specific territory
Item 13: Verified trademarks are federally registered — not just pending or common law
Item 13: Noted any trademark ownership disputes or third-party claims
Item 14: Reviewed all patent and copyright disclosures
Items 15–18: Operations & obligations
Item 15: Confirmed owner participation requirements (full-time vs. semi-absentee)
Item 16: Understood all restrictions on what I can and cannot sell
Item 17: Read ALL renewal, termination, and transfer provisions carefully
Item 18: Noted any public figures associated with the brand
Items 19–23: Financial performance & closing documents
Item 19: Noted whether financial performance data is provided at all
Item 19: If present — identified what IS and IS NOT represented (revenue vs. profit?)
Item 19: Calculated median performance — not just average
Item 19: Identified bottom-quartile performance for stress testing my model
Item 19: Asked the franchisor for raw data to build my own financial model
Item 20: Calculated the system's annual unit closure and termination rate
Item 20: Reviewed the ratio of opened vs. closed units over 3 years
Item 20: Identified and will contact former franchisees from the Item 20 list
Item 21: Had a CPA review the franchisor's audited financial statements
Item 21: Assessed whether the franchisor is financially stable and growing
Item 22: Confirmed I have received all contracts I will be asked to sign
Item 23: Will sign the receipt page only AFTER the 14-day waiting period
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