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4 Hidden Gems In Your FDD

In Item 20 of the Franchise Disclosure Document, or FDD, franchisors are required to provide tables that contain outlets and franchisee information.  This item provides information on current operating outlets, company-owned outlets, future openings, terminations and more.  You may have a tendency to gloss over the tables because they can seem redundant but they actually provide valuable information and insight into the franchise system’s growth strategy and trends.  Franchisors are required to provide four tables that contain the following information:

  1. A system-wide outlet summary;
  2. The number of transfers from franchisees to new owners;
  3. The status of franchisee-owned outlets (terminated, not renewed, reacquired, etc.); and
  4. Status of company-owned outlets.

These tables are also broken down by state and year so you can determine the number of franchisees in your state as well as how many franchisees have transferred to new owners, not-renewed or have been terminated.  Based on the numbers provided, you can also determine whether the franchise as a system is growing, maintaining the status quo, or declining from year to year.  By studying these tables, you can find valuable information that may not be disclosed elsewhere, spot any trends (good or bad) and refine your list of questions for the franchisor.