When launching a new franchise business, important paperwork is often filed to serve as a legal document and an outline of your business as a whole. One such document is called a Franchise Disclosure Document (FDD).

It specifically outlines a franchisor’s entire written franchise program and provides information about the franchisor and franchise agreement. The document also details a complete description of the initial investment costs.

Franchisors do not expressly state in a franchise agreement that it is their responsibility to make any franchisee successful. Instead, franchisors develop tools and systems for their franchisees to use to find success.

Breakdown of the Franchise Disclosure Document (FDD)

All FDDs follow the same format, as mandated by the Federal Trade Commission (FTC). They all consist of 23 items; plus, any exhibits and appendices the franchisor includes. Below is a brief description of each:

• Item 1: A general review of the company, including any predecessors or affiliates.
• Item 2: Background information on officers, directors, and key employees.
• Item 3: Litigation; a ten-year history.
• Item 4: Outlines bankruptcy the company or its officers have declared in the past.
• Item 5: Reviews the franchise fee and other initial fees.
• Item 6: Ongoing costs, such as royalties, advertising, renewal, and transfer fees.
• Item 7: Breakdown of the initial investment by type of expenditure.
• Item 8: Who are the approved suppliers, and who do franchisees purchase products from?
• Item 9: Your obligations to the business as a franchisee.
• Item 10: Financing sources.
• Item 11: The franchisor’s obligations under the franchise agreement.
• Item 12: Territory descriptions.
• Item 13: Registered trademarks the franchisor is granting the franchisee the right to operate their business under
• Item 14: Patents, copyrights, and proprietary information the franchisor owns and is granting access to.
• Item 15: Obligation to participate in the actual operation of the business; day-to-day management requirements.
• Item 16: Products and services a franchisee may sell.
• Item 17: How to renew or transfer the business
• Item 18: What, if any, public figures represent the brand.
• Item 19: Financial performance representations for the franchise system – some franchisors withhold this.
• Item 20: Total number of outlets and franchisees.
• Item 21: Audited financials representing the health of the franchisor.
• Item 22: Franchise agreement and other agreements.
• Item 23: Acknowledgement of FDD receipt.

What to do with the FDD

When it comes time, all candidates should review the FDD with a licensed legal professional. It is important to find an attorney who specializes in franchise law as they will understand all the ins and outs of franchising. In our experience, franchise candidates who hire attorneys outside the franchising industry receive pages of copious legal notes and high legal bills from attorney research. Ultimately, these candidates rarely get the expert advice they pay for.

Lastly, as you review the FDD, assume these are the terms you will be doing business under. Note that should you choose the right franchisor, your relationship will be personal, not legal.

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If you're considering entering the world of massage franchises, MassageLuXe presents an exciting opportunity. With our consistent high rankings among industry experts, proven business model, comprehensive support system, and standout culture, MassageLuXe offers aspiring entrepreneurs a chance to own a rewarding business in the growing wellness industry.

Learn more about franchising with MassageLuXe here. If you’re interested in learning more about the process of becoming a franchise owner, read more about our process here. To start your journey of becoming a franchise owner with MassageLuXe, fill out our form here, and we’ll be in touch to start an introductory conversation. We look forward to learning more about your entrepreneurial goals and how we can help you achieve them with a MassageLuXe franchise!