Field guide entry

A field guide to restaurant franchises

How to read an FDD, what Item 19 means, why ongoing fees and square footage matter more than a slogan.

This is a field manual for reading restaurant franchise paper. It is not döner-only. The worked examples are the kebab and halal QSR packets a New York buyer actually gets: Döner Haus, German Doner Kebab, Shah’s Halal, The Halal Guys, and Doner Shack, which has no current US FDD.

A Franchise Disclosure Document is long, dull and legally required to tell you the truth about a short list of things. Most of what makes a deal good or bad is in four of its twenty-three items. The entries below work through those, in the order you should read them.

Before your first call

  • Ask for the FDD in writing, and note the issue date and the state it was filed in.
  • Find Item 5 and Item 6 first. Initial fee, then the ongoing percentage stack.
  • Find Item 7 and read the range, not the low end.
  • Turn to Item 19. If it is empty, that is an answer.
  • Ask for the Item 20 franchisee list and call the ones who left.

Entries

  1. How to read an FDD The twenty-three items, and the four that decide the deal.
  2. Item 19 Financial performance representations, and what an empty Item 19 tells you.
  3. Ongoing fees Royalty plus brand fund is the number that compounds. Watch for uncapped.
  4. What it costs to open Item 7 totals, cheapest first. The high end is the planning number.
  5. Term and territory How long you are in, and what ground the filing actually protects.
  6. System size Item 20 outlet counts. A 323-unit chain and a six-unit shop, side by side.
  7. Training Item 11 hours, added up. Fifteen hours and five hundred are not the same offering.
  8. QSR vs fast casual The label changes the rent, the labor and the build.
  9. Footprint and labor questions Square feet and headcount at peak are the two costs nobody advertises.
  10. Red flags in franchise marketing Territory maps, pipeline counts, and other things that are not disclosures.
  11. Emerging food categories How to tell a real category gap from a deck slide.
A compact quick-service unit in a narrow street-front bay
Footprint is an FDD question, not a vibe. Ask what the typical unit actually is, in square feet.

The document itself

The deal is in four of twenty-three

Every FDD is the same twenty-three items in the same order, which is what makes it readable in an evening. Read these four first.

23 Numbered items

Fixed order, every brand, every year. Item 7 is the estimated initial investment; Item 20 is outlet counts and transfers.

4 That decide the deal

Item 5 the fee, Item 6 the ongoing stack, Item 7 the check to open, Item 19 whether they will show you a number.

19 The optional item

Item 19 is the only place a financial performance representation can live, and roughly a third to a half of franchisors include one.

21 Audited financials

Item 21 is the franchisor's own audited statements. Read them against Item 20's openings and closings.