The franchise disclosure document (FDD), the annual filing by a franchise corporation that includes all of the information an entrepreneur will be privy to when considering a franchise investment, can include two dozen sections and run to hundreds of pages. But FDDs all have one thing in common, according to attorney Richard Rosen:
"These documents are pretty long, on purpose," said Rosen, current chairman of the New York State Franchise Bar Association and a member of the Franchise Times' "Legal Eagles Hall of Fame." That purpose is to favor the franchise corporation over the prospective franchisee.
Rosen, who has reviewed countless FDDs during his career while representing hundreds of entrepreneurs buying into franchise systems, said reading these documents in their entirety is essential research, but there are the sections of the FDD that are the most important for entrepreneurs to understand.