The FDD - Items 18-23
Item 18: Public figures - If the franchisor uses any public figure (celebrity
or other public person) in the franchise system’s name or symbol, the franchisor
needs to disclose the amount the person is paid, the extent the public figure is
involved in the actual management of the franchise system, and the public figure’s
total investment in the franchisor.
Item 19: Earnings claim – Earnings claims are difficult as it depends on
so many factors. In this section, the franchisor provides any information that a
franchisee can use to estimate what she or he can earn from the business. This may
include specific levels or a range of actual or potential sales, costs, income,
or profit for a franchise or non-franchised location. Please remember that these
numbers are based on the franchisors current or past business, your earnings how
you operate your business.
Item 20: List of franchise outlets - This section will be of great value
to you. It provides the number of franchises and company-owned locations by state;
with contact information names, addresses, and telephone numbers of franchisees.
It will give the estimated number of franchises to be sold in the next year; the
number of franchises transferred, canceled, or terminated; the number of franchises
that have not been renewed by the franchisor or have been reacquired by the franchisor.
The franchisor is required to provide you with the names and last known addresses
and telephone numbers of every franchisee who has had an outlet terminated, canceled,
or not renewed, or who otherwise ceased doing business under the franchise agreement
during the past year.
Item 21: Financial statements - Franchisors are required to include their
audited financial statements for the past three years or for a shorter period if
the franchisor has not been in business for three years.
Item 22: Contracts – In this item, you will view the franchise agreement
or license agreement and all other related agreements that the franchisee will be
required to sign. These agreements must be attached as exhibits to the FDD.
Item 23: Receipt – This is a receipt to indicate that you have indeed received
your copy of the FDD. It also marks the date the document is in your hands. You
must have the FDD for a minimum of 14 days before you sign up with the franchise.
Information obtained from the FBA - for additional information go to
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