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What Is a Franchise Disclosure Document?

Once you inquire about starting a franchise, you’ll receive some documents from the franchisor. One of the most important documents is the franchise disclosure document (FDD). According to the Federal Trade Commission (FTC), the purpose of this document is to give you detailed information about the franchise so that you can make an informed decision about whether you want to pursue the process further.

A majority of this document includes vital financial information, so the document is sometimes called a financial disclosure document. Here’s what you need to know about the FDD when you are pursuing a franchise investment.

Franchise Fees

As a prospective franchisee, you need to know what fees you will be charged. The franchisor must inform you about initial fees and any other fees that might be included, such as:

  • Deposits
  • Inventory
  • Leases
  • Rentals
  • Signage
  • Equipment
  • Advertising
  • Royalties

The best franchises will be honest about all fees because any hidden ones may cause disputes.

Estimated Initial Franchise Investment

Starting a franchise means you will need to invest some money upfront. The franchisor is required to give you an estimate of this amount in the FDD. Typically, the estimate gives a price range rather than an exact amount. However, if you receive an estimate in the form of a price range, you can ask the franchisor if you should expect it to be in the higher or lower end. The estimate includes what you need to cover your working capital.

Financial Statements

The franchisor will also give you audited financial statements from the previous three years. These statements may include:

  • Cash flows
  • Owner’s equity
  • Statements of operations
  • Balance sheets

This will give you a good idea of how the franchise is performing.


The FTC requires all franchises to disclose whether they or their executives have declared bankruptcy recently. This will help you figure out if the franchisor has the financial stability you need. If the franchisor has recent bankruptcies, you may question whether the parent company is capable of giving you the support you need to succeed.


The FDD will also include any contracts you will need to sign, including:

  • Franchise agreement
  • Product supply agreements
  • Financing agreements
  • Software licensing agreements
  • Personal guarantees

Other contracts may be included depending on the franchise.

Financial Performance Representations

This is not a required section for all FDDs, but some franchisors choose to include it. This is an opportunity for franchisors to provide potential franchisees like you with information on earnings, sales, and expenses.

Franchisee Information

Additionally, the franchisor must give you a summarization of all other franchises, including the contact information for other franchisees and any franchisees who left. You may want to contact current and former franchisees to get more information about whether investing is a good idea. This is a great way to learn more about the pros and cons of starting a franchise with the company in question.

Starting a franchise may seem daunting, but we are here to make the process easier to understand. If you have questions about starting a Best In Class Education Center franchise, read our guide to getting started.


Meet Our Franchisees

Best in Class Education Center has developed a flexible system that allows you to create your own work schedule and caters to your personal needs in establishing a new business. Veronica Reyna, a multi-unit franchisee from Cypress, Texas, has some great advice on what it’s like to get started with our program and some tips for those of you that are thinking of starting a franchise with us.


-Veronica Reyna

Best in Class Education Center believes in providing you with all the tools you’ll need to succeed. In this video, Ira Giri, a multi-unit franchisee out of Katy, Texas, shares her Franchisee Training experience with you and how it prepared her to be a successful franchise owner.


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Best in Class franchisees come from many different backgrounds and nationalities, but what they all have in common is a deep passion for helping their community and an immense drive to be successful entrepreneurs. In this video, four franchisees from different parts of the country will share with you why they chose Best in Class Education Center to be their ultimate franchising opportunity.


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Carole Said, a franchisee out of Houston, Texas, has a few words to share with you about her onboarding experience and why she chose Best in Class Education Center.


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