FDD Review Checklist
The Money You Will Owe the Franchisor
- Ongoing royalty and brand-fund percentages (Items 6 and 11), applied to your projected revenue, not the seller's
- The transfer fee this purchase itself triggers (Item 17), and who customarily pays it
- Required technology, software, and supply purchases priced through the franchisor (Items 8 and 11)
- Any required remodel or refresh a transfer triggers, with its real cost and deadline
Territory and Competition
- Whether the territory is exclusive, protected, or neither (Item 12), in the contract's words
- The franchisor's right to sell online or through other channels inside your territory
- How many units the system added and closed nearby (Item 20's tables, three years back)
The System's Health
- Litigation history (Item 3): patterns of franchisee suits matter more than any single case
- Franchisor financials (Item 21): a thin balance sheet behind a royalty stream is your risk
- Turnover in Item 20: transfers, terminations, and non-renewals against the unit count
- Calls to three current and two former franchisees, which the FDD's contact lists exist for
What a Transfer Changes for You
- Whether you sign the CURRENT franchise agreement, not the seller's older, often better one
- Remaining term and renewal conditions (Item 17), and what renewal will cost
- The franchisor's approval process and timeline for this transfer, in writing
- Personal guarantee and non-compete obligations the agreement imposes on you
Earnings Claims, Read Correctly
- Item 19's basis: whose units, which years, gross or net, and whether the seller's unit is typical of it
- The seller's own books against Item 19, explained if they diverge either way
Take the list with you: it pastes cleanly into notes or a diligence tracker.