According to the Federal Franchise Rule, as a franchisor, you are required to deliver and provide your prospective franchisees with your franchise disclosure document (FDD). This may seem like one of the simpler tasks in establishing your agreement. However, there is a specific way to handle this delivery without running into consequences. Follow along to find out how to deliver this document and how one of the proficient franchise law attorneys at FortmanSpann, LLC can walk you through this.

What should I know about the FDD Disclosure Receipt?

Upon entering a franchise agreement with a franchisee, you must retain a compliance file that shows that you properly delivered your FDD by federal and state law. This is otherwise known as your FDD Disclosure Receipt, which may be included in Item 23 of your FDD.

And then, upon delivering your FDD to a franchisee, you must have them sign the receipt to show that they acknowledge the date that they received it. With this, you should also keep the following things in mind:

  • You must include the date the FDD was received.
  • You must include the date any additions to the FDD were received.
  • You must include the date the first agreement was received by the franchisee.
  • You must include the date any other agreements were received by the franchisee.
  • You must include the date a payment was first delivered by a franchisee.
  • You must include the name of the individual who delivered the first payment.

Who should I deliver this document to?

In addition to properly delivering the FDD Disclosure Receipt, it is equally important to understand what parties this receipt should be delivered to. Such parties include the following:

  • You must deliver this to all franchisees.
  • You must deliver this to any relevant principal officer of a franchisee.
  • You must deliver this to any relevant general partner of a partnership.
  • You must deliver this to any relevant manager of a limited liability company.

How long do I have to deliver this document?

The Federal Franchise Rule also states the deadline you have for delivering this document. More specifically, this deadline is generally 14 days before receiving any payments from a franchisee and entering into any agreement with a franchisee. Failure to comply with this deadline may lead to serious consequences.

If you require assistance with making this first step, you must retain the services of one of the talented franchise law attorneys. We are knowledgeable about what this delivery process entails, so pick up the phone and give us a call today.