Make Up the Heart of Franchise Disclosure Document

1. Make Up the Heart of Franchise Disclosure Document The heart and soul of the disclosure slice of the Franchise Disclosure Document (FDD) --and certainly its very purpose - is set forth in the Items. Individually Item is given an explicit title (which cannot be reformed), and within respective Item, the franchisor is obligatory to provide the answers to numerous mandated questions. Following is the incline of Items (by precise title) along with a brief portrayal of the content to be found there. Item 1. The Franchisor, and any Parents, Predecessors and Associates Item 1 gives you the franchisor’s contextual and that of any parent company, predecessors and associates. A predecessor is defined as - a person from whom the franchisor assimilated directly or indirectly the most important portion of its assets. An associate is defined as - a person controlled by, governing, or beneath common control with the franchisor. Item 2. Business Practice This Item gives you the previous few years’ worth of the personal business practice of the franchisor’s directors, general partners, officers, trustees and any other folks who’ll have management accountability relating to the offered franchises. Item 3. Lawsuit In this Item, the franchisor must unveil any substantial lawsuit concerning the franchisor and antecedent, paternal and associate, if the lawsuit comprises dues about the franchisor’s sales process, their performance beneath the franchise documents and claims of fraud, antitrust, unfair or illusory trade practices, or comparable allegations. The franchisor must also unveil any franchisor- initiated lawsuit against its franchisees and any other corporate if, at the lawsuit destructively impacts the franchisor’s monetarist condition or their capability to function a franchise. www.frantastic.in

2. Item 4. Bankruptcy This Item must unveil any bankruptcy in the past decade that intricate the franchisor and any parent, affiliate, predecessor, officer or general partner of the franchisor, or any other individual who will have management accountability concerning to the sale or operation of the franchise. Item 5. Preliminary Fees Here, the franchisor (and any of their associates) must disclose all of the initial fees they charge to the franchisee before inaugural. Such fees comprise the initial fee paid to purchase the franchise rights (often called the preliminary franchise fee), computer or point-of-sale gear that must be bought only from the franchisor or their associates, and similar fees. Item 6. Other Fees This section of the FDD instructs you of any other fees you’ll have to pay to the franchisor or an associate as well as costs that are composed by the franchisor for third parties, or that are otherwise www.frantastic.in

3. levied. Line items contain a statement of the advertising fees, service fees, royalties, training fees, renewal fees and other comparable one-time or ongoing charges. Item 7. Estimated Preliminary Investment In this section, the franchisor must unveil an array of the least and extreme of all fees, costs and expenses that the franchisee will incur preceding to opening the business, including the initial franchise fee, real property expenses such as rent and construction outlays, the cost for computer equipment and alike line items. The expenses must comprise both pre-opening expenses and those suffered during the “early phase,” which is a sensitive period for the industry. Item 8. Limitations on Sources of Products and Services Franchisors necessitate franchisees to buy the goods and service required only from approved vendors. This section lists the official vendors and also calls out the franchisor’s stipulations for permitting a new vendor into the structure. It will recognize any revenue the franchisor receives from the essential purchases, including allowances received by the franchisor from any supplier. Item 9. Franchisee’s Tasks This Item lists your responsibilities as a franchisee, with references to the sections of your franchise treaty that contain the obligations. The purpose of this is to recognize your principal responsibilities under the franchise agreement and other treaties. Item 10. Financing If the franchisor sponsors funding for novel franchisees, it will be brought out in this section. Item 11. Franchisor’s Assistance, Promotion, Computer Systems and Training This is one of the more extensive and significant disclosure Items. In this Item, the franchisor must unveil: • The services they’ll offer to the franchisee before and after opening. • All advertising expenses you’re expected to assume. • The average time it takes a franchisee to unclutter. • The type of computer and alike electronics necessary to operate the business. • A thorough description of the training you can expect to receive. • The table of contents of the operations guides. Item 12. Region The franchisor must unveil whether it offers franchisees an “exclusive region” within which to operate the business. With a selected region, the franchisor promises that it won’t permit another franchisee to pinpoint within the region and that it will also exhort from putting a company-owned or affiliate-owned corporate there. This Item must also unveil whether you can relocate, and if so, what the standards are for your move and whether you have any rights to procure additional units. One of the more imperative disclosures in this section is whether you’re obligatory to meet a quota or perform in some other manner as a way of ensuring either your right to an exclusive region or www.frantastic.in

4. your right to continue in business at all. This Item will also unveil the franchisor’s reservation to itself of certain promotion and sales rights either within or outside any region. Item 13. Trademarks This section must recognize each principal “Mark” (trademark, trade name, service mark, service name or logotype) to be certified to you, and must state whether the franchisee is obligatory to modify or discontinue use of a mark under any settings. Item 14. Patents, Copyrights and Proprietary Info The section spells out the patents and copyrights apprehended by the franchisor. Item 15. Commitment to Participate in the Actual Operation of the Franchise Business This section discloses whether the franchisee must personally partake in the operation of the franchise. If there is no such compulsion, this section must explain whether the franchisor endorses such participation, whether the person who’s controlling everyday operations must complete the franchisor’s training plug-in, and whether this individual must own an equity interest in the franchisee object. www.frantastic.in

5. Item 16. Limitations on What the Franchisee May Sell In most cases, the franchisor will necessitate the franchisee to sell only the goods and services that are a slice of the franchised business. This section spells out those limitations. Item 17. Renewal, Transfer, Termination and Dispute Resolution Item 17 comprises a cross-referencing table to the franchise treaty for 23 separate line items. It’s unlike than Item 9 in that it embraces a concise statement of the content of the specific franchise- agreement covenant as well as the site of the covenant in the treaty. Item 18. Community Figures This section requires the franchisor to unveil whether it uses an eminent person to sanction the franchise. If so, it must disclose the recompense paid or promised to the person, the person’s engrossment in management or control of the franchisor and the amount of the person’s speculation in the franchisor. Item 19. Monetary Performance Representations In layperson’s terms, a Financial Performance Representation (FPR) is any chart, arithmetic calculation, document, math formula or other representation that would let a potential franchisee to determine what they could gross. The only way the franchisor or its sales staff or brokers can propose an FPR is if it’s specified in this Item 19. If no such info is found in Item 19, any claims made by the franchisor as to your possible earnings are in the desecration of the law. Item 20. Outlets and Franchise Info This section provides information regarding prevailing outlets in the franchise system. It covers channel transfers - and the status of franchised and company- possessed outlets - for the past few fiscal years, as well as projected beginnings for the next fiscal year. It must also offer info regarding any reporting variations, any privacy clauses signed by franchisees through the past few fiscal years, and data about firm trademark franchisee relations. Item 21. Financial Statements The FDD must encompass an exhibit with the franchisor’s audited financial statements for the prior few fiscal years. The franchisor is also obligatory to provide a separate, audited financial statement for a company governing 80 per cent or more of the franchisor. Item 22. Contracts This section needs the franchisor to attach to the FDD a copy of all form pacts the franchisee will sign, including the franchise pact, leases, options and purchase treaties. Item 23. Receipt In this concluding section, the franchisor is obligatory to include as the last page of the FDD a form for the potential franchisee to sign to recognize receipt of the FDD. Conclusion At Frantastic, we help our clients by providing various franchising opportunities to make it the right first time in franchising world. www.frantastic.in