by the FTC in July 2007.
What Must be Included in the FDD
23. An acknowledgment of the franchisee’s receipt of the FDD.
The franchise rule sets forth the minimum standards regarding the franchisor’s
obligations, but does not include any type of registration or filing requirement. The franchise
rule, however, allows individual states to supplement the federal law with their own state specific
franchise laws and requirements. Fifteen (15) states have enacted state-specific franchise laws
and added additional regulations to be followed by franchisors. Thirteen (13) of these states
require franchisors to file and have their FDD approved before franchises can be offered in their
state. These states are commonly referred to as “registration states.” These state-specific laws
apply to franchises that are intended to be opened in these states and/or to potential franchisees
who are residents of these states.
Duty to Update an FDD
state or approved by the state, depending upon the state’s specific laws.
Penalties for Disclosure Violations
From the franchisee’s point of view, FDDs are usually very lengthy, complex and
potentially intimidating. LegalStandard.comsm can review any FDD and explain the document to the
potential franchisee so that he or she understands the documents and the risks associated with
the investment. The cost of an FDD review starts at $895.00.