FRANCHISE DISCLOSURE DOCUMENTS

A: Before they sign the franchise agreement.
Your prospects need to be able to review all the information in the disclosure document at least 14 days before they sign your franchise agreement. In fact, one of the items included in the FDD (listed below) is an acknowledgement of receipt.

A: There are typical items that need to be in your document.

• details of certain types of legal proceedings against the franchisor or its directors
• contact details of current as well as former franchisees (unless the former franchisee has requested in writing that their details not be disclosed)
• the franchisee’s costs to start operating the franchised business and other payments or fees they may be required to make
• details of the arrangements that will apply when the franchise agreement comes to an end (including whether the franchisee will have an option to renew or extend the agreement or enter into a new agreement).

A: Yearly

In Australia, the ACCC requires all franchisors to update their FDD annually.

In the US, the FTC requirement is that franchisors update their FDDs within the first four months (120 days) of their fiscal year. Additionally, some individual states have their own deadlines, so it is essential that you know when you need to have your update complete in your territory.

A: You need to follow the laws of the country/countries in which you are franchising.

Your responsibility as an international franchisor is to learn the laws of the country or countries in which you are expanding, and then follow those laws. Every country regulates franchises differently, so depending on your targeted country’s rules you may have to create a different document with slightly different points. The good news is AFI is the expert in international franchising, and we can help you navigate all the regulations you will face.