A franchise disclosure document (FDD) is the pre-sale file the FTC Franchise Rule makes a franchisor give you at least 14 calendar days before you sign or pay: 23 Items on the company, costs, contract and outlet record.
Key takeaways
- An FDD has 23 Items, each defined in 16 CFR 436.5(a) to (w), behind a cover page whose wording is fixed by 16 CFR 436.3.
- You must receive it at least 14 calendar days before you sign or pay; a mailed copy counts as furnished only if mailed at least 3 calendar days earlier (16 CFR 436.2(a) and (c)).
- Franchisors must reissue the FDD within 120 days after each fiscal year ends and add quarterly revisions for material changes (16 CFR 436.7).
- Item 19 is optional: 200 of 259 FDDs issued 2025 to 2026 (77.2%) include a financial performance representation, per our Item 19 disclosure index.
- The median FDD we downloaded from Minnesota CARDS runs 241 pages with exhibits (middle half 199 to 301 pages).
- No agency vouches for the contents: the cover page must say in bold that no governmental agency has verified the information (436.3(e)(2)).
What is a franchise disclosure document?
A franchise disclosure document is the single plain-English file a franchisor must give a prospective buyer before any franchise sale in the United States, under the FTC Franchise Rule at 16 CFR Part 436. It sets out 23 numbered Items on the company, its fees, your contract and its outlet record. It informs you; no regulator verifies it.
The current 23-Item format comes from the FTC’s 2007 amendment of the rule (72 FR 15544, March 30, 2007), which replaced the older Uniform Franchise Offering Circular (UFOC) layout. Under 16 CFR 436.6(c) and (d), every Item must be answered, negatively if it does not apply, and the electronic version may not carry audio, video, pop-ups or links to outside material.
The cover page tells you three things before Item 1: the total investment from Item 7, the amount of it paid to the franchisor or an affiliate, and the 14-day rule. The example below is the cover of a home-services FDD issued March 18, 2026.
Some states add their own layer. The FTC and NASAA list 14 franchise registration states, as reported by the GAO in report GAO-23-105338, where the FDD is filed with a state regulator before sale; our registration states guide reads each statute.
| Key number | Rule or measure | Source |
|---|---|---|
| 23 Items | Required disclosure Items, plus a cover page | 16 CFR 436.3 and 436.5 |
| 14 calendar days | Minimum time between receiving the FDD and signing or paying | 16 CFR 436.2(a) |
| 3 calendar days | Mail allowance: a first-class copy must be sent at least this long before the deadline | 16 CFR 436.2(c)(3) |
| 7 calendar days | Notice for a unilaterally and materially changed agreement | 16 CFR 436.2(b) |
| 120 days | Deadline to reissue the FDD after fiscal year end | 16 CFR 436.7(a) |
| 3 years | How long the franchisor keeps each signed receipt | 16 CFR 436.6(i) |
| 241 pages | Median length of 259 filed FDDs, exhibits included | Our page count, Minnesota CARDS PDFs, 2026-10-20 |
| 14 states | Franchise registration states | GAO-23-105338 |
What are the 23 Items in an FDD?
The 23 Items run in a fixed order set by 16 CFR 436.5: Items 1 to 4 describe who is selling, 5 to 7 and 10 what it costs, 8 to 16 how you must operate and what rights you get, 17 and 22 the contract, 18 to 21 how the system is doing, and Item 23 is the receipt. The table pairs each Item with one fact we measured.
The measured column comes from 259 FDDs issued January 24, 2025 to August 18, 2026 and filed with the Minnesota Department of Commerce, the same sample published as our franchise disclosure document database. Four Items (2, 9, 14 and 16) have no measured field yet, and we say so rather than guess.
Items 1 to 11: the franchisor, costs and operating rules
| Item | Title (16 CFR 436.5) | What it contains | Measured in 259 FDDs, 2025 to 2026 | Source |
|---|---|---|---|---|
| 1 | The Franchisor and any Parents, Predecessors, and Affiliates (436.5(a)) | Who the franchisor is, its parent and affiliates, the business, the market and industry-specific laws | 45 of 250 franchisors (18.0%) had been franchising under 5 years | Emerging franchise brands index, 2026-10-08 |
| 2 | Business Experience (436.5(b)) | Each director and officer, with positions and employers during the past five years | Not measured in our reports | Rule text only |
| 3 | Litigation (436.5(c)) | Pending franchise, fraud and securities actions, last fiscal year franchise suits, 10-year lookback | 148 of 259 (57.1%) list at least one action | Litigation disclosure report |
| 4 | Bankruptcy (436.5(d)) | Bankruptcies of the franchisor, affiliates and officers in the 10 years before the FDD date | 24 of 259 (9.3%) disclose a bankruptcy | Litigation disclosure report |
| 5 | Initial Fees (436.5(e)) | Every fee paid before opening, refund conditions, and the range paid if fees are not uniform | Median initial franchise fee $49,500 (middle half $35,000 to $59,975) | Royalty rates report, 2026-10-05 |
| 6 | Other Fees (436.5(f)) | Table of every recurring or occasional fee: royalty, brand fund, technology, transfer, renewal, audit | Median royalty 6% of sales (239 FDDs with a percentage royalty) | Royalty rates report |
| 7 | Estimated Initial Investment (436.5(g)) | Table of opening costs with low and high estimates, including additional funds for at least three months | Median low estimate $265,372; median high $573,000 | Initial investment report, 2026-10-07 |
| 8 | Restrictions on Sources of Products and Services (436.5(h)) | Required and approved suppliers, specifications, and franchisor revenue or rebates from your purchases | 257 of 259 (99.2%) require purchases from the franchisor or approved suppliers | Supplier rebates index, 2026-10-08 |
| 9 | Franchisee’s Obligations (436.5(i)) | Cross-reference table of 25 obligations, rows a to y, pointing to contract sections and other Items | Not measured in our reports | Rule text only |
| 10 | Financing (436.5(j)) | Terms of any loan, lease or installment plan the franchisor or an affiliate offers | At least 166 of 259 (64.1%) state flatly that no direct or indirect financing is offered | Our count of the 259 FDDs, 2026-10-20 |
| 11 | Franchisor’s Assistance, Advertising, Computer Systems, and Training (436.5(k)) | Support before and after opening, the ad fund, computer systems, training, time to open | Median initial training 76 hours; median typical time to open 5.9 to 9 months | Training and time-to-open reports, 2026-10-18 and 2026-10-08 |
Items 12 to 17: your rights and the contract terms
| Item | Title (16 CFR 436.5) | What it contains | Measured in 259 FDDs, 2025 to 2026 | Source |
|---|---|---|---|---|
| 12 | Territory (436.5(l)) | Whether you get a protected area, its size, and what the franchisor reserves inside it | 221 of 259 (85.3%) print “You will not receive an exclusive territory” | Territory rights report |
| 13 | Trademarks (436.5(m)) | Principal marks, USPTO registration status, and any known challenges | 247 of 259 (95.4%) list a Principal Register registration for the brand name | Trademarks report, 2026-10-17 |
| 14 | Patents, Copyrights, and Proprietary Information (436.5(n)) | Patents, copyrights and pending applications material to the franchise, and how the manual is protected | Not measured in our reports | Rule text only |
| 15 | Obligation to Participate in the Actual Operation of the Franchise Business (436.5(o)) | Whether the owner must work in the business or may hire a manager, and any limits on that manager | 202 of 259 (78.0%) let a hired manager run the unit | Semi-absentee index, 2026-10-09 |
| 16 | Restrictions on What the Franchisee May Sell (436.5(p)) | Limits on products, services and customers, and whether the franchisor can change them | Not measured in our reports | Rule text only |
| 17 | Renewal, Termination, Transfer, and Dispute Resolution (436.5(q)) | The 23-row relationship table, rows a to w: term, renewal, termination, transfer, non-compete, forum and law | 65.6% set a 10-year initial term; 71.4% require binding arbitration | Agreement terms report |
Items 18 to 23: the system record, contracts and receipt
| Item | Title (16 CFR 436.5) | What it contains | Measured in 259 FDDs, 2025 to 2026 | Source |
|---|---|---|---|---|
| 18 | Public Figures (436.5(r)) | Any celebrity endorsement, what the person is paid and any management role | 250 of 259 (96.5%) state no public figure is used; 9 (3.5%) describe one | Our count of the 259 FDDs, 2026-10-20 |
| 19 | Financial Performance Representations (436.5(s)) | Optional sales, cost or profit data with its basis, or the required statement that none is made | 200 of 259 (77.2%) include a financial performance representation | Item 19 index |
| 20 | Outlets and Franchisee Information (436.5(t)) | Five outlet tables for three fiscal years, contacts for current franchisees and for owners who left | Median system lost 4.7% of franchised outlets in one year (220 systems) | Closure rates report |
| 21 | Financial Statements (436.5(u)) | Audited GAAP statements: two year-end balance sheets, three years of operations and cash flows | 259 of 259 attach audited statements; 74 (28.6%) show negative equity | Franchisor financial health report |
| 22 | Contracts (436.5(v)) | Copies of every proposed agreement: franchise agreement, lease, options and purchase agreements | 252 of 259 (97.3%) require or provide for an owner’s personal guarantee | Personal guarantee fact sheet, 2026-10-18 |
| 23 | Receipts (436.5(w)) | Two detachable receipt pages naming each franchise seller, the issuance date and the exhibits | Not measured; present by rule | Rule text only |
Grouped by the question a buyer asks, the 23 Items fall into six sets:
- Who is selling? Item 1: Franchisor and affiliates; Item 2: Business experience; Item 3: Litigation; Item 4: Bankruptcy.
- What will it cost? Item 5: Initial fees; Item 6: Other fees; Item 7: Estimated initial investment; Item 10: Financing.
- What must you buy and do? Item 8: Restrictions on sources; Item 9: Franchisee’s obligations; Item 11: Assistance and training; Item 15: Obligation to participate.
- What rights do you get? Item 12: Territory; Item 13: Trademarks; Item 14: Patents and copyrights; Item 16: Restrictions on what you sell.
- How does the contract work? Item 17: Renewal, termination, transfer; Item 22: Contracts; Item 23: Receipts.
- How is the system doing? Item 18: Public figures; Item 19: Financial performance; Item 20: Outlets and franchisees; Item 21: Financial statements.
Some disclosures are close to universal and some are rare. In the same 259 FDDs, 99.2% restrict where you buy supplies (Item 8) while 3.5% name a public figure (Item 18). The chart plots the shares from the table.
Share of 259 FDDs issued 2025 to 2026 with each disclosure, from our Item reports and corpus counts (Minnesota CARDS, accessed 2026-10-20).
When must you receive the FDD, and when can you sign?
The franchisor must furnish its current FDD at least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate anything, under 16 CFR 436.2(a). The clock runs from delivery, not from the day you sign the Item 23 receipt. A changed contract adds a separate 7-day wait.
Under 16 CFR 436.2(c), the FDD counts as furnished when it is handed over, faxed or emailed, when you get directions to read it online, or, for a paper or disk copy, when it was mailed first class at least 3 calendar days before the deadline. The FTC’s consumer guide to buying a franchise (September 2020) words it as 14 days before you are asked to sign any contract or pay any money.
| Deadline | Who it binds | What triggers it | Rule |
|---|---|---|---|
| 14 calendar days | Franchisor and sellers | Delivery of the current FDD, before any signature or payment | 16 CFR 436.2(a) |
| 3 calendar days | Franchisor | Mailing a paper or disk copy by first-class mail | 16 CFR 436.2(c)(3) |
| 7 calendar days | Franchisor | Unilateral, material change to the agreements attached to the FDD | 16 CFR 436.2(b) and 436.9(g) |
| 120 days | Franchisor | Close of the fiscal year: revised FDD, after which only the new one may be used | 16 CFR 436.7(a) |
| Each quarter | Franchisor | Any material change: revisions attached to the FDD | 16 CFR 436.7(b) |
| 3 years | Franchisor | Each completed sale: keep the signed receipt | 16 CFR 436.6(i) |
Worked example: the earliest signing date
The dates below apply the rule text to a franchisor with a December 31, 2025 fiscal year end and a buyer who gets the FDD on Monday, March 2, 2026. Email delivery allows signing on March 16; a mailed copy pushes it to March 19. Changes that you negotiate yourself do not restart the 7-day wait, per 436.2(b).
| Step | Date | Arithmetic | Rule |
|---|---|---|---|
| Fiscal year ends | December 31, 2025 | Day 0 | 16 CFR 436.7(a) |
| Revised FDD due | April 30, 2026 | 31 + 28 + 31 + 30 = 120 days | 16 CFR 436.7(a) |
| FDD emailed to you | Monday, March 2, 2026 | Delivery day | 16 CFR 436.2(c)(1) |
| Earliest signing or payment after email | Monday, March 16, 2026 | March 2 + 14 days | 16 CFR 436.2(a) |
| Same FDD mailed instead | Mailed March 2, counts March 5 | March 2 + 3 days | 16 CFR 436.2(c)(3) |
| Earliest signing after mailing | Thursday, March 19, 2026 | March 5 + 14 days | 16 CFR 436.2(a) |
| Franchisor changes the fee clause on its own, sends it March 12 | Thursday, March 19, 2026 | March 12 + 7 days, later than March 16 | 16 CFR 436.2(b) |
Which Items matter most for your decision?
Items 7, 19, 20 and 21 carry the numbers, and Items 3, 12 and 17 carry the risk. The decision table turns each into a threshold you can check against the document, using medians from our 259-FDD sample as reference points rather than as targets. A franchise lawyer reads Items 17 and 22; an accountant reads Item 21.
| If the FDD shows | Then | Reference point |
|---|---|---|
| Fewer than 14 calendar days have passed since the FDD was delivered | Wait. Do not sign or pay | 16 CFR 436.2(a) |
| The agreement differs materially from the Item 22 copy | Wait 7 days after the revised copy | 16 CFR 436.2(b) |
| The FDD is not the current issue (more than 120 days past fiscal year end with old Item 21 statements) | Ask for the revised FDD | 16 CFR 436.7(a) |
| Anyone gave sales or profit figures outside Item 19 | Ask for substantiation; report it to the FTC and your state | 16 CFR 436.9(c) |
| Item 20 exits above 4.7% of franchised outlets in a year | Call former owners from the Item 20 list and ask why they left | Median in 220 systems, closure rates report |
| Item 21 shows negative equity or going-concern language | Have an accountant read the notes and any state fee deferral | 28.6% and 2.7% of 259 FDDs |
| Item 3 lists franchisor suits against franchisees | Read each case summary for royalty, termination or fraud claims | 45.4% of 606 own-system actions |
| Item 12 prints “You will not receive an exclusive territory” | Map what the franchisor reserves: online sales, other channels, other brands | 85.3% of 259 FDDs |
| Item 7 high estimate is more than double the low | Budget to the high end and ask which line drives the gap | Median ratio 1.92x |
Item 6 deserves a line-by-line read too. In July 2024 the FTC said in staff guidance announced July 12, 2024 that franchisors cannot lawfully impose and collect fees that were not previously disclosed, so any fee not in Item 6 is worth a written question. Our franchise costs guide explains how Items 5, 6 and 7 add up.
Is Item 19 required, and where do earnings numbers belong?
Item 19 is optional. A franchisor may include a financial performance representation if it has a reasonable basis and written substantiation; if it gives none, Item 19 must say so in the wording fixed by 16 CFR 436.5(s). Either way, sales or profit figures may only come from Item 19, under 16 CFR 436.9(c).
In our sample, 77.2% of FDDs include an Item 19, and 50.5% of those report revenue-type measures only, with no cost or profit line, according to the Item 19 index. We publish no Item 19 figures: read them in the brand’s own FDD.
Two exceptions in the rule let a seller give other figures: the actual records of an existing outlet you are buying, and a supplement to the Item 19 data for a specific location. Anything else, such as a spreadsheet from a broker or a number said on a call, falls outside 436.9(c) and can be reported to the FTC and your state regulator.
How long is an FDD, and how often is it updated?
A typical FDD is a few hundred pages once the contracts and audited statements are attached. Of the 259 FDD PDFs we downloaded from Minnesota CARDS, the median runs 241 pages, the middle half 199 to 301 pages, and the range 111 to 723 pages. Each is reissued yearly and patched quarterly.
Most of the length sits in Items 21 and 22: two years of balance sheets and three years of income and cash-flow statements under 16 CFR 436.5(u), then every agreement you would sign. Under 16 CFR 436.7(a), once 120 days pass after fiscal year end, a seller may hand out only the revised FDD, so check the issuance date on the cover against Item 21’s latest balance sheet date.
Start-up franchisors may phase in audits under 436.5(u)(2), beginning with an unaudited opening balance sheet in their first year of selling. Even so, all 259 FDDs in our sample attached audited statements, and 28.6% showed negative equity, per our franchisor financial health report.
Who is exempt from giving an FDD?
The FTC rule exempts some sales from disclosure under 16 CFR 436.8, with dollar thresholds the FTC adjusts every fourth year by the Consumer Price Index; the current figures date from the July 12, 2024 amendment (89 FR 57078). State registration laws can still apply when the federal exemption does.
| Exemption | Threshold | Condition | Rule |
|---|---|---|---|
| Minimum payment | Under $735 | Total required payments to the franchisor or affiliate before opening and in the first six months | 16 CFR 436.8(a)(1) |
| Large investment | At least $1,469,600 | Excludes unimproved land and franchisor financing; buyer signs a written acknowledgment | 16 CFR 436.8(a)(5)(i) |
| Large franchisee | Net worth at least $7,348,000 | Buyer entity in business for at least five years | 16 CFR 436.8(a)(5)(ii) |
| Insider purchase | 50% or more bought by insiders | Officers or managers of at least two years, or owners of at least 25% of the franchisor | 16 CFR 436.8(a)(6) |
| Fractional franchise, leased department, petroleum dealer, oral deal | No dollar test | As defined in the rule | 16 CFR 436.8(a)(2), (3), (4), (7) |
Where can you find a franchise’s FDD for free?
Ask the franchisor first: under 16 CFR 436.9(e), a seller must give you the FDD earlier than the 14-day deadline on reasonable request. To read one before you talk to anyone, use the public filings in registration states, where FDDs filed with the regulator become public records you can search by brand.
The Minnesota Department of Commerce’s CARDS franchise registration search lets you filter by franchise registrations and download the filed PDF; all 259 FDDs in our sample came from it. California, Indiana and Wisconsin run similar searches, and a brand appears only in states where it is registered, so a regional brand may be missing from all of them.
Our franchise disclosure document database lists those 259 FDDs with 669 coded fields and a link to each filing. Read the brand’s current filing, because a version from another state can carry different state addenda. Our buying a franchise guide places the FDD read in the full buying sequence, from shortlist to signing.
What do top FDD guides get wrong?
Four claims in top-ranking FDD guides do not match the rule text or current data. Each row names the claim neutrally and the primary source that settles it, checked on October 20, 2026. The fixes matter for timing: one error changes the day you may legally sign.
| A top guide says | The primary source says | Source |
|---|---|---|
| A law-firm guide updated July 2026 says the 14-day period starts when you sign the Item 23 receipt | The clock runs from when the FDD is furnished: delivered, emailed, made available online, or mailed 3 calendar days earlier. The receipt records it | 16 CFR 436.2(a) and (c) |
| The same guide says FDDs must be registered in 13 states | The FTC and NASAA list 14 registration states | GAO-23-105338 |
| A widely read encyclopedia entry titles Item 19 “Earnings Claims” | Item 19 is “Financial Performance Representations” and is optional; 77.2% of 259 recent FDDs include one | 16 CFR 436.5(s) |
| A 2017 business-magazine guide says audits may be phased in if the franchisee has been open less than three years | The phase-in applies to a start-up franchisor’s years of selling franchises, not to the franchisee | 16 CFR 436.5(u)(2) |
How we compiled this
We read the FTC Franchise Rule in the 2026 Code of Federal Regulations (sections 436.2 to 436.9) on govinfo, plus 5 FTC pages, on October 20, 2026. Item facts come from 16 of our research reports built on 259 FDDs filed in Minnesota and issued 2025 to 2026, and two new counts (Items 10 and 18) we ran on the same filings, with every Item 18 exception read by hand.
We excluded all Item 19 figures, franchisee names and party names. This page explains a federal rule; it is not legal, financial or investment advice, and state law can add duties not covered here.
Frequently asked questions
What is a franchise disclosure document?
A franchise disclosure document (FDD) is the document a franchisor must give a prospective buyer under the FTC Franchise Rule, 16 CFR Part 436. It has a fixed cover page and 23 Items covering the franchisor, fees, investment, contract terms, outlet counts and audited financial statements. No government agency verifies it, and the cover page must say so in bold.
What are the 23 items in an FDD?
Items 1 to 4 cover the franchisor, its managers, litigation and bankruptcy. Items 5 to 7 cover fees and investment; 8 to 16 cover suppliers, obligations, financing, support, territory, trademarks, patents, owner participation and product limits. Item 17 covers renewal and termination, 18 public figures, 19 financial performance, 20 outlets, 21 financial statements, 22 contracts and 23 receipts.
How long do you have to review an FDD before signing?
At least 14 calendar days. Under 16 CFR 436.2(a), the franchisor must furnish the current FDD at least 14 calendar days before you sign a binding agreement or pay any money. A mailed paper copy only counts if sent at least 3 calendar days earlier, and a unilaterally changed agreement must reach you 7 calendar days before you sign it.
Is Item 19 required in an FDD?
No. Item 19 financial performance representations are optional under 16 CFR 436.5(s), but a franchisor that gives none must print the FTC’s statement saying so. In 259 FDDs issued 2025 to 2026, 200 (77.2%) included an Item 19. Any sales or profit figures must appear in Item 19 and nowhere else, under 16 CFR 436.9(c).
How often is a franchise disclosure document updated?
Once a year in full, plus quarterly patches. Under 16 CFR 436.7(a), the franchisor must prepare a revised FDD within 120 days after its fiscal year closes, and after that only the new version may be used. Under 436.7(b), it must attach revisions for material changes after each quarter. A December 31 year end means a new FDD by April 30.
Where can I get a franchise's FDD for free?
Ask the franchisor, which must give it to you early on reasonable request under 16 CFR 436.9(e). Registration states publish filed FDDs: the Minnesota Department of Commerce CARDS search lets anyone download filed PDFs, and California, Indiana and Wisconsin run similar searches. A brand appears only in states where it registered, so smaller systems may be missing.
Sources
- 16 CFR 436.2, Obligation to furnish documents, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR 436.3, Cover pages, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR 436.5, Disclosure items, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR 436.6, Instructions for preparing disclosure documents, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR 436.7, Instructions for updating disclosures, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR 436.8, Exemptions, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR 436.9, Additional prohibitions, U.S. Government Publishing Office (govinfo), CFR 2026, accessed 2026-10-20.
- 16 CFR Part 436 (eCFR), National Archives, eCFR, accessed 2026-10-20.
- Franchise Rule, Federal Trade Commission, accessed 2026-10-20.
- Amended Franchise Rule FAQs, Federal Trade Commission, accessed 2026-10-20.
- A Consumer’s Guide to Buying a Franchise (September 2020), Federal Trade Commission, accessed 2026-10-20.
- FTC Takes Action to Ensure Franchisees’ Complaints Are Heard and Protect Against Illegal Fees (July 12, 2024), Federal Trade Commission, accessed 2026-10-20.
- Franchise registrations search (CARDS), Minnesota Department of Commerce, accessed 2026-10-20.
- Christmas Decor Franchise Disclosure Document, issued March 18, 2026, cover page, Decor Group Franchising LLC, via Minnesota CARDS, accessed 2026-10-20.
- GAO-23-105338: FTC Actions Needed to Improve Education Efforts and Awareness of Complaint Process for Franchise Owners (April 2023), U.S. Government Accountability Office, accessed 2026-10-20.
- Franchise Consultants and Brokers research reports on 259 Minnesota-filed FDDs (2026-10-05 to 2026-10-18), each citing the filed FDDs.