Understanding the Franchise Disclosure Document (FDD)
Understanding the Franchise Disclosure Document (FDD)
Ugh. It looks and feels big and heavy. Not to mention - legal. No fun. Scary even. Rest assured that most people do not look forward to reviewing legal documents. Your feelings are perfectly normal and healthy. What you don’t know is that the franchise disclosure document you hold in your hands is a lot friendlier than it looks. It is a standardized document, brimming with franchise information. Often you will read that the FDD is written to protect the franchisor; you should also know that it protects the franchisee by leveling the playing field. The franchisor is required to share franchise information in a clear, transparent fashion. In turn, all prospective franchisees clearly know their rights can be expected to meet the same standards.
So put yourself in a positive frame of mind and dive in. Give the FDD your full attention now rather than making assumptions that may turn out to be erroneous. You don’t want to count on using equipment you already own, or adding your wife’s special carrot cake to the menu, only to find out that it would violate the business model. Franchise systems work best when there are clear systems, standards and expectations. The value of your franchise is enhanced and the brand is strengthened when all franchisees offer consistently superior products and services.
The FDD covers every facet of the business, including:
1. What is covered in your franchise fee and initial investment.
2. Physical property requirements, such as the location, building, equipment and supplies.
3. A definition of the operating practices which protect the entire franchise system.
4. Initial and on-going training and assistance provided by the franchisor.
5. Whether advertising will be local or national and if the cost will be shared.
6. How royalties are calculated and paid.
7. Bookkeeping, accounting and reporting requirements.
8. The parameters of your protected territory.
9. More, much more
Pay special attention to territory. This is one area of the Franchise Agreement that is often negotiable. For more information on all the sections in the FDD and what to look for in each section, read Chapter 7 of The Educated Franchisee.
Studying the FDD and the Franchise Agreement is a critical part of your franchise education! Go over each section carefully to understand how each item will affect you. A good franchisor will spend whatever time necessary to answer all your questions regaridng the FDD. In the end, you might decide you can’t live with the terms. Best to learn that now! And remember – at this stage of the franchise investigation fear is normal. Let it push you to seek the information you need to make the right decision for you. Remember the saying by Rob Gilbert - 'It's OK to have butterflies in your stomach. Just get them to fly in formation.'
Understanding the Franchise Disclosure Document FDD - To learn more about this author, visit Rick Bisio's Website.
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Until now, it’s been kind of exciting, hasn’t it? This whole ‘franchise education’ process? You’ve told your family and friends that you’re thinking of being your own boss, you’ve found a franchise that seems to fit your goals and desires, you’ve talked to existing franchisees … but now it’s time to read the Franchise Disclosure Document (FDD) and Franchise Agreement.
Ugh. It looks and feels big and heavy. Not to mention - legal. No fun. Scary even. Rest assured that most people do not look forward to reviewing legal documents. Your feelings are perfectly normal and healthy. What you don’t know is that the franchise disclosure document you hold in your hands is a lot friendlier than it looks. It is a standardized document, brimming with franchise information. Often you will read that the FDD is written to protect the franchisor; you should also know that it protects the franchisee by leveling the playing field. The franchisor is required to share franchise information in a clear, transparent fashion. In turn, all prospective franchisees clearly know their rights can be expected to meet the same standards.
So put yourself in a positive frame of mind and dive in. Give the FDD your full attention now rather than making assumptions that may turn out to be erroneous. You don’t want to count on using equipment you already own, or adding your wife’s special carrot cake to the menu, only to find out that it would violate the business model. Franchise systems work best when there are clear systems, standards and expectations. The value of your franchise is enhanced and the brand is strengthened when all franchisees offer consistently superior products and services.
The FDD covers every facet of the business, including:
1. What is covered in your franchise fee and initial investment.
2. Physical property requirements, such as the location, building, equipment and supplies.
3. A definition of the operating practices which protect the entire franchise system.
4. Initial and on-going training and assistance provided by the franchisor.
5. Whether advertising will be local or national and if the cost will be shared.
6. How royalties are calculated and paid.
7. Bookkeeping, accounting and reporting requirements.
8. The parameters of your protected territory.
9. More, much more
Pay special attention to territory. This is one area of the Franchise Agreement that is often negotiable. For more information on all the sections in the FDD and what to look for in each section, read Chapter 7 of The Educated Franchisee.
Studying the FDD and the Franchise Agreement is a critical part of your franchise education! Go over each section carefully to understand how each item will affect you. A good franchisor will spend whatever time necessary to answer all your questions regaridng the FDD. In the end, you might decide you can’t live with the terms. Best to learn that now! And remember – at this stage of the franchise investigation fear is normal. Let it push you to seek the information you need to make the right decision for you. Remember the saying by Rob Gilbert - 'It's OK to have butterflies in your stomach. Just get them to fly in formation.'
Understanding the Franchise Disclosure Document FDD - To learn more about this author, visit Rick Bisio's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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