What is a FDD Franchise Disclosure Document?

The Federal Trade Commission issued a new FTC franchise Rule that became effective in 2007, the first major revision since the Rule was enacted in 1979. That is when the name of the document changed from UFOC (Uniform Franchise Offering Circular) to FDD (Franchise Disclosure Document). An FDD Franchise Disclosure Document is a legally-required document intended to give prospective buyers enough pre-sale information so they can make an informed investment decision before investing large sums of money and making lengthy legal commitments. Sometimes running into hundreds of pages in length, the FDD includes 23 chapters of information, audited financial statements and copies of all contracts. However, there are significant topics and areas of financial concern that are not disclosed in an FDD. Due principally to the influence of the strong lobby by franchise companies and their associations, critical disclosures are either not required or are substantially watered down.