How to Prepare and File Franchise Documents
A franchise disclosure document or FDD is a packet of information that contains all of the information about a franchise along with the franchise agreement and addendum. According to ftc.gov these documents are not filed with the federal government but some states do require that they are filed at the state level. Franchise documents should be created only by qualified franchise attorneys.
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Instructions
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Develop your concept
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Before you can prepare and file franchise documents your business the concept must be fully developed. Individuals buy franchises because they want proven, systematized, repeatable, successful business models. All of the "kinks in the system" should be worked out before a business is franchised.
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Work with your attorney to draft the FDD and franchise agreement. Most franchisors will find that the entire document is about 130 pages when complete. All FDDs follow a similar format which makes it tempting to try to edit another franchises document to fit your own and save on legal fees. There are lots of legal details in how these documents are prepared and an attorney should always be the one to do it.
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File your FDD with the registration states that you wish to sell franchises in. 15 states require registration. The registration process is different from state to state but typically a small fee is paid to the state department of securities or business opportunities and the FDD is filed with that organization. Registration should occur before serious franchise discussions in a registration state begin.
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Tips & Warnings
There are consulting firms that work with franchise attorneys to build and develop concepts, consider working with one so that you have a one-stop-shop for your franchise development needs.
References
Resources
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