Franchising Basics: What Is an FDD and Why Is It Important?

Stand-Up Burgers is your opportunity to start a vegan quick-service restaurant and make a difference in your community. Whether you’re new to franchising or a seasoned investor, one term you’re bound to have come across in your research is FDD. What is an FDD, and why is it important?

In the franchising world, an FDD stands for Franchise Disclosure Document. Most, if not all, franchise opportunities have an FDD that’s available for prospective franchisees to review.

When you become a Stand-Up Burgers franchisee, you’ll go through a series of steps designed to provide all the information you need to determine whether we’re a good fit for each other. We present our FDD to franchisees so they can learn how the Stand-Up Burgers franchise opportunity works, along with our franchise agreement, before we dive deep into the pre-opening process.

What Does an FDD Contain?

FDDs contain a wealth of information that can help answer many questions a potential franchisee might have. Broken down into Items, the FDD usually contains:
Item 1: A description of the franchisor and its history as a company.
Item 2: Biographical and professional information about the franchisor and its leadership team.
Item 3: Relevant current and past criminal and civil litigation concerning the franchisor.
Item 4: Whether the franchisor or leadership team has gone through bankruptcy.
Item 5: Information about the initial fees and the factors that determine the amount.
Item 6: Information about all other fees.
Item 7: A table of the initial investment expenditures required by the franchisee.
Item 8: The restrictions on sources of products and services.
Item 9: The obligations that the franchisee agrees to when they sign the franchise agreement.
Item 10: Terms and conditions surrounding the financing arrangements offered by the franchisor.
Item 11: The advertising, training, computer, and other assistance that the franchisor will provide to the franchisee.
Item 12: The description of exclusive territories and territory modifications.
Item 13: Information about the franchisor’s trademarks, services, and trade names.
Item 14: Information about the franchisor’s patents, copyrights, and other proprietary information.
Item 15: The franchisee’s obligations in terms of business operations.
Item 16: Any restrictions on goods and services that the franchisee may offer.
Item 17: Information about renewal, termination, transfer, and dispute resolution between the franchisee and franchisor.
Item 18: If the franchisor utilizes public figures and the amount each is paid.
Item 19: The franchisor may disclose information on unit financial performance.
Item 20: The locations and contact information of existing franchises and outlets.
Item 21: The franchisor’s audited financial statements for the past three years.
Item 22: The agreements/contracts that the franchisee will be required to sign.
Item 23: A receipt that states that the franchisee received the FDD.

Why Is the FDD Important?

As you can see, the FDD is an all-important document for prospective franchisees. By breaking down all of the details of our franchise opportunity and Stand-Up Burgers as a franchisor, you’ll learn what you can expect from us and what we’ll expect from you as a franchisee. In addition, you’ll be able to reach out to current franchisees to learn more about their experiences, gain a better understanding of the financial requirements, and more.

The FDD is designed to answer all of your questions in terms of franchising. Still, if you do have any questions after you’ve had the chance to review it, we encourage you to meet with an advisor or lawyer for further clarification.
In the process of becoming a Stand-Up Burgers franchise owner, after you’ve reviewed our FDD, you’ll get a chance to meet our leadership team, sign your franchise agreement, locate a site for your business, attend training, and host a grand opening before you can open your restaurant.

At Stand-Up Burgers, we understand how the process involved in opening your restaurant may seem daunting, but rest assured, we’re with you every step of the way.

Stand up for what you believe in! Contact us today to learn more about “what is an FDD?” and what it takes to get your Stand-Up Burgers restaurant started.