If you're planning to franchise your business, there’s a critical compliance step you can’t skip: franchise disclosure. Whether you’re an emerging franchisor or scaling nationally, the Franchise Disclosure Document (FDD) is the legal foundation of your franchise offer — and missteps can delay deals, trigger fines, or even open the door to litigation.
This guide offers a practical, plain-English overview of what you need to know about franchise disclosure requirements, including how and when to provide an FDD, what must be included, and what you can (and can’t) say about potential earnings.
The FDD is a comprehensive legal document that franchisors must give to prospective franchisees before offering or selling a franchise. It’s required under the Federal Trade Commission (FTC) Franchise Rule.
The purpose? To protect prospective franchisees by ensuring they receive a complete and accurate picture of the opportunity — before making a financial commitment.
The FDD is structured into 23 disclosure Items and often runs 150+ pages, including exhibits and required agreements. Key information includes:
✅ Background on the franchisor and key executives
✅ Initial and ongoing fees
✅ Estimated startup and operating costs
✅ Territorial rights and restrictions
✅ Franchisee obligations
✅ A summary of key terms from the franchise agreement
✅ Supplier restrictions and purchasing requirements
✅ Item 19 (if included): Financial performance representations
✅ Audited financials (unless exempt during startup phase)
✅ All relevant contracts and sample agreements
💡 Pro Tip: While the format is standardized by the FTC, some states require additional disclosures — often addressed in state-specific addenda to the FDD and agreements.
Timing matters. Under the FTC Rule, you must give a prospective franchisee the FDD at least 14 calendar days before:
They sign any binding agreement, or
They pay any money to the franchisor.
💡 Pro Tip: The 14 days begin the day after delivery of the disclosure document. You can disclose earlier in the process.
📍 State Variations:
Example: New York and Michigan require earlier disclosure — either before or at the first personal meeting or 10 business days before signing.
Other states, especially registration states, may impose stricter timing or format rules.
According to the FTC Rule, a prospective franchisee has the right to request the FDD at any time during the sales process. And if they do, you must provide it — even if the standard 14-day clock hasn't started yet.
You must honor early FDD requests from:
Prospects who have submitted a franchise application, AND
Have been notified that they meet your qualifications to purchase a franchise
Curious individuals who haven’t applied or been qualified
Competitors looking to snoop
Journalists, academics, or researchers
💡 Tip from Zors: Keep track of your qualified leads and disclosure dates inside your CRM or franchise sales software (like Zors). This helps ensure you never miss a compliance deadline — or violate disclosure rules by accident.
The FTC Franchise Rule allows franchisors to furnish the FDD in multiple ways, as long as it's delivered on time.
But here’s where many franchisors fall short:
✅ It’s not enough to just send the FDD — you need to prove you sent it, and that the prospect received it.
📬 Hand-Delivery or Mail
Deliver a printed copy in person or mail it to the prospect's provided address.
📧 Email or Fax
Emailing a PDF or faxing the FDD is fine, as long as you document the send date.
🌐 Secure Web Access (Best Practice!)
Provide directions for accessing the document on the Internet
💽 Electronic Media
Provide a tangible electronic copy on a USB drive, CD-ROM, or other electronic format by first class mail to the prospect.
💡 Every FDD includes a Receipt Page — it’s your compliance lifeline.
To protect your franchise system and validate compliance, always:
Have the prospective franchisee sign and date the Receipt Page
Keep a scanned or digital copy in your records
🛡️ Zors makes this easy — prospects can sign the Receipt Page digitally using Zors integrated electronic signature platform, and it’s automatically stored with a timestamp inside their lead record.
Helps avoid regulatory issues during audits
Protects against claims of nondisclosure
Keeps your franchise sales team compliant across every deal
Navigating the franchise disclosure process isn't just about checking boxes — it’s about building trust, avoiding regulatory missteps, and setting the tone for a successful franchisor-franchisee relationship.
From properly delivering the FDD to crafting clear, compliant financial performance representations, every step matters.
⚠️ Franchisors who fail to follow disclosure rules risk fines, litigation, and reputational harm — but those who understand and document their obligations are better positioned for long-term growth.
💡 With tools like Zors, you can automate key disclosure milestones, digitally track receipt signatures, and stay organized through every stage of the franchise sales process. That means:
Fewer compliance errors
Cleaner audit trails
A faster, smoother experience for your candidates
📲 Ready to take the guesswork out of franchise compliance?
Learn how Zors can help you simplify disclosures, manage FDD versions, and keep your team aligned — all in one platform.
🛑 Disclaimer:
The information provided in this blog post is for general informational purposes only and is not legal advice or a substitute for consulting with a qualified attorney. Franchise law is complex and highly nuanced, governed by both federal regulations and varying state-specific laws. Proper legal guidance requires a detailed understanding of these rules as applied to your specific circumstances. You should not act—or refrain from acting—based on anything in this post. You should consult your franchise attorney for legal advice.
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