The Franchise Disclosure Document

The disclosure document should outline the salient features of the franchise, its characteristics, details and a feasibility study.

The Franchise Disclosure Document

First, it will list the contact details of the franchisor, the names and details of the shareholders and senior employees of the franchisor, as well as the company’s background, history and structure.

Next follows a description of services and products, together with the factors influencing success; the details of the franchisor’s initial and ongoing support and training; an outline of the contents of the procedural manual; total investment required (including a breakdown of the franchise royalties, administration fees and working capital) and a short feasibility study.

Details of other franchisees should be included. Any past and present financial difficulties of the franchisor and franchisee must be noted, along with the full details, requisites, equipment, layout and proposed sites for an average franchise outlet. Finally, the Disclosure Document will include a summary of the Franchise Agreement.

The purpose of the document is to ensure that the potential franchisee has sufficient accurate information to help them assess the franchise operation, and make an informed decision about whether to enter the Franchise Agreement or not.The Disclosure Document is often used as a selling tool by the franchisor, so they will usually be willing to let you peruse it if they believe you have a real interest in buying into the system.

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