franchise FDD explainer
The FDD is the disclosure franchisors must give before you sign or pay. The FTC Consumer's Guide says you must receive it "at least 14 days before you are asked to sign," and to read each of the 23 numbered Items. FDD Insight says "the rule requires 23 specific items of disclosure." Open Items 5–7, 19, and 20 first.
Last updated: September 5, 2026
Items buyers open first
| Item | What it covers | Buyer use |
|---|---|---|
| Item 3 | Litigation History — FTC Consumer's Guide; FDD Insight describes a list of lawsuits and legal actions involving the franchisor | Pattern of franchisee disputes |
| Item 5 | Initial fees — FDD Insight glossary Item 5; FTC Initial and Ongoing Costs (Items 5-7) | What you pay before opening; broker payments when disclosed |
| Item 7 | Estimated total initial investment — FDD Insight glossary Item 7; FDD Insight says the low end does not mean what most people spend | Low/high ranges the franchisor published, including working capital |
| Item 17 | Renewal, termination, transfer, and dispute resolution — FTC Consumer's Guide; FDD Insight Item 17 | How hard it is to exit or transfer |
| Item 19 | Financial performance representations — FDD Insight says Item 19 is optional and the FTC does not require every franchisor to include an Item 19 | Optional FPR section; may be absent |
| Item 20 | Outlet history and contacts — FTC charts showing growth and owner turnover; FDD Insight lists openings, transfers, terminations, non-renewals plus current and former franchisee contacts | Compare openings to terminations and non-renewals; call the list |
| Item 21 | Franchisor financial statements — FTC; FDD Insight says audited by an independent certified public accountant | Have an accountant read them |
| Item 22 | Contracts / exhibits — FDD Insight says these include the actual contracts you will sign | The franchise agreement you would actually sign |
The FTC Consumer's Guide tells buyers to read each of the 23 numbered Items. Rule cite: 16 CFR Part 436. FDD Insight says the rule requires 23 specific items of disclosure.
FDD Insight says many of these agencies make registered FDDs publicly searchable online: California DFPI, Minnesota CARDS, Wisconsin DFI.
Related: franchise consultant cost, do I need a franchise consultant.
| Claim | URL | Listed |
|---|---|---|
| FDD at least 14 days before sign or pay | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | at least 14 days before you are asked to sign |
| Read each of the 23 numbered Items | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Read each of the 23 numbered “Items” in the FDD |
| Item 20 growth and owner turnover charts | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Item 20 provides charts showing growth and owner turnover |
| Current and former franchisees | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | current and former franchisees |
| Item 3 litigation history | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Litigation History (FDD Item 3) |
| Items 5–7 initial and ongoing costs | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Initial and Ongoing Costs (FDD Items 5-7) |
| Item 17 renewal, termination, transfer, dispute | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Renewal, Termination, Transfer and Dispute Resolution (FDD Item 17) |
| Item 19 financial performance representations | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Financial Performance Representations (FDD Item 19) |
| Item 21 financial statements | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Financial Statements (FDD Item 21) |
| Accountant review of statements | ftc.gov/business-guidance/resources/consumers-guide-buying-franchise | Consider having an accountant |
| FTC Franchise Rule is 16 CFR Part 436 | ftc.gov/legal-library/browse/rules/franchise-rule | 16 CFR Part 436 |
| FDD definition (glossary) | fddinsight.com/glossary | A regulated disclosure document that franchisors must provide to prospective franchisees |
| Federal 14 calendar days (glossary) | fddinsight.com/glossary | Federal law requires at least 14 calendar days |
| 23 specific items of disclosure | fddinsight.com/blog/what-is-a-franchise-disclosure-document | the rule requires 23 specific items of disclosure |
| Item 19 is optional | fddinsight.com/blog/fdd-item-19-explained | Item 19 is optional |
| FTC does not require every franchisor Item 19 | fddinsight.com/blog/fdd-item-19-explained | does not require every franchisor to include an Item 19 |
| Item 20 current and former franchisee contacts | fddinsight.com/blog/fdd-item-20-outlet-trends | contact information for current and former franchisees |
| Terminations and non-renewals in Item 20 | fddinsight.com/blog/fdd-item-20-outlet-trends | transfers, terminations, non-renewals |
| State agencies make FDDs searchable | fddinsight.com/blog/how-to-find-franchise-fdds | Many of these agencies make registered FDDs publicly searchable online |
Sources (fetched 5 Sep 2026): FTC Consumer's Guide; FTC Franchise Rule (16 CFR Part 436); FDD Insight glossary; What is an FDD; Item 19 explained; Item 20 outlet trends; How to find FDDs; state directories CA DFPI / MN CARDS / WI DFI.
Frequently Asked Questions
What is a Franchise Disclosure Document?
The Franchise Disclosure Document (FDD) is the disclosure franchisors must give prospective franchisees before any agreement is signed or payment is made. The FTC Consumer's Guide tells buyers to read each of the 23 numbered Items. FDD Insight says it is a regulated disclosure document that franchisors must provide to prospective franchisees.
How long before signing must a franchisor provide the FDD?
The FTC Consumer's Guide states that you must receive the document at least 14 days before you are asked to sign any contract or pay any money to the franchisor or an affiliate. FDD Insight says federal law requires at least 14 calendar days. Do not waive that waiting period.
How should buyers read FDD Item 20 outlet tables?
Compare openings, terminations, and non-renewals on the Item 20 table. The FTC Consumer's Guide says Item 20 provides charts showing growth and owner turnover and lists current and former franchisees. FDD Insight lists contact information for current and former franchisees and that transfers, terminations, and non-renewals matter. Call the listed contacts.
Is FDD Item 19 required?
No. FDD Insight says "Item 19 is optional" and that the FTC does not require every franchisor to include an Item 19. When present, Item 19 is where franchisors may disclose financial performance representations.