# How to read an FDD

A Franchise Disclosure Document is a pre-sale disclosure. It is not a brochure, and the regulator that accepts a filing does not certify the opportunity. The [federal rule's required cover language](https://www.law.cornell.edu/cfr/text/16/436.5) says that no government agency has verified the information.

## A first pass in seven moves

**1. Identify the document.** Match the legal franchisor on the cover to the party named in the proposed agreement. Record the issuance date and any later amendment. A recognizable trade name is not enough when different affiliates own trademarks, collect fees or supply products.

**2. Read Items 1 through 4 for the counterparty.** Item 1 maps parents, predecessors and affiliates. Items 2, 3 and 4 disclose management experience, specified litigation and bankruptcy. The point is not to count pages; it is to know which entity owes support and which entity's financial statements appear in Item 21.

**3. Connect Items 5, 6 and 7.** Item 5 covers fees paid before opening. Item 6 covers other required payments, including recurring and event-driven charges. Item 7 estimates the cash needed to establish and begin operating the business. A fee can appear in more than one place for different reasons, so reconcile the labels rather than adding every matching number twice.

**4. Test the operating promise.** Item 8 identifies restricted sources; Item 11 states the franchisor's assistance, systems and training; Item 12 describes territory; and Item 16 limits what the outlet may sell. Read these together. A simple menu does not necessarily mean a simple procurement, technology or staffing model.

**5. Read Item 19 without skipping its population.** A financial performance representation may use franchised stores, company stores or a subset. Record the metric, period, number of outlets, exclusions and how many met or exceeded an average. If the Item says no representation is made, do not fill that space with a landing-page claim.

**6. Rebuild Item 20's movement.** Separate openings, transfers, terminations, non-renewals, reacquisitions and closures. The ending count is only the snapshot. The movement explains how the system got there.

**7. Finish with Items 17, 21, 22 and the exhibits.** Item 17 summarizes renewal, termination, transfer and dispute terms; Item 21 contains the franchisor's financial statements; Item 22 lists contracts; and Item 23 records receipt. The franchise agreement controls, so compare every important summary to the actual clause.

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<p class="eyebrow">What to ask for</p>

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### Item 6

The percentage, fixed and event-driven charges, their bases, minimums and adjustment rights. A current rate is not automatically a contractual ceiling.

<p class="status">Ask for: the cap language, verbatim</p>

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### Item 7

The range, format and footnotes. Premises size, initial operating period and assumptions often matter more than the headline total.

<p class="status">Ask for: the footnotes, not the low end</p>

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### Item 19

Whether there is a financial performance representation at all, which metric it uses and how many comparable units it covers.

<p class="status">Ask for: the Item 19 pages, or the reason there are none</p>

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### Item 20

Opened, closed and transferred outlets, plus current and former franchisee contacts. A locator shows neither historical movement nor ownership changes.

<p class="status">Ask for: the list, then call the ones who left</p>

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<p class="eyebrow">The four that decide it</p>

## Start with four, <b>then follow every cross-reference</b> {: .display }

<p class="lede">Items 5, 6, 7 and 19 expose the economic outline quickly. Items 8, 11, 12, 17, 20 and 21 tell you whether that outline belongs to the restaurant, contract and franchisor you are actually evaluating.</p>

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## Work from current, public examples

The [FTC's buyer guidance](https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-taking-deep-dive-franchise-disclosure-document) explains the fourteen-day delivery rule and why Item 19 claims and Item 20 contacts matter. For practice, compare the regulator pages for [GDK's 2025 filing](https://apps.dfi.wi.gov/apps/FranchiseSearch/details.aspx?id=639752&hash=370187205&search=external&type=GENERAL) and [The Halal Guys' 2025 filing](https://apps.dfi.wi.gov/apps/FranchiseSearch/details.aspx?id=639117&hash=921753141&search=external&type=GENERAL) with the complete [2025 Shah's Halal document filed in Minnesota](https://cards.web.commerce.state.mn.us/documents/%7B9078B29B-0000-C21E-982F-C2FDAFB07783%7D/download?contentSequence=0&documentClass=FRANCHISE_REGISTRATIONS). The formats are adjacent, but the investment tables, system histories and contractual details are not interchangeable.

A public filing is useful for learning and comparison. For an actual transaction, obtain the current FDD from the franchisor, preserve the delivery email and receipt, and have counsel confirm that amendments and the agreement match the version reviewed.

## Item 23, exhibits, and version control

The receipt is not clerical. Item 23 is how you prove which PDF you were furnished and when. Keep it with the delivery email. If an amendment arrives later, file it as a new version and restart any waiting period counsel says the amendment requires. The [fourteen-day rule](/fourteen-day-rule/) is a clock on a specific document, not on "the brand."

Item 22 lists the contracts. Open every exhibit named there before treating Items 5, 6, 12 or 17 as complete. A development agreement can impose a five-outlet minimum while Item 7 is printed per store — GDK's FDD issued 3 September 2024 is that structure. A personal guarantee can outlive a transfer. A software license can auto-renew after termination. None of that is visible in a cover-page investment range.

## A worked two-filing pass

Put two public documents on the desk and fill the same eight lines for each.

| Line | GDK (practice file) | Shah's Halal (practice file) |
| --- | --- | --- |
| Legal franchisor / issue checkpoint | [2025 Wisconsin filing page](https://apps.dfi.wi.gov/apps/FranchiseSearch/details.aspx?id=639752&hash=370187205&search=external&type=GENERAL) | [2025 Minnesota-filed FDD](https://cards.web.commerce.state.mn.us/documents/%7B9078B29B-0000-C21E-982F-C2FDAFB07783%7D/download?contentSequence=0&documentClass=FRANCHISE_REGISTRATIONS) |
| Format in Item 7 | Typical 1,200–1,400 sq ft; five-outlet minimum (2024 FDD used in this set) | Full-sized restaurant, 1,200–2,000 sq ft (FDD issued 10 April 2024) |
| Item 5 | $30,000 | $30,000 |
| Item 6 stack as disclosed | 6% + 3% + 2% local; uncapped annual increases on royalty and fund | 5% + 1% + 1% local |
| Item 7 total | $690,500–$1,123,000 | $197,000–$405,000 (high lines sum to $410,000) |
| Item 19 | One full-year mall unit, $1,383,053 gross (2024 FDD) | No representation |
| Item 20 | 7 franchised at year-end 2023; Item 1 claimed 9 by issuance | 58 total; 0 franchised; 44 licensed |
| Item 17 / 12 | 10 years; non-exclusive protected area, no minimum size | 10 years; driving-distance area, non-traditional excluded |

The Halal Guys' [2025 Wisconsin filing](https://apps.dfi.wi.gov/apps/FranchiseSearch/details.aspx?id=639117&hash=921753141&search=external&type=GENERAL) is the third copy of the homework: 6% royalty, 2% brand fund, 1% local, $60,000 fee, $461,400–$1,333,500 Item 7, no Item 19 in the 2024 comparative record used here, 93 units as of 2024. Same cuisine neighborhood, different paper.

## Misreads this desk sees repeatedly

**Adding Item 5 on top of Item 7.** The franchise fee is usually already inside the total.

**Treating "protected" as exclusive.** GDK's 2024 territory is non-exclusive and has no minimum size. Capriotti's 2024 comparative record has no protected area at all.

**Filling an empty Item 19 from a call or a deck.** Shah's and The Halal Guys in the 2024 sources make no representation. A manager's round number is not a substitute.

**Counting locator pins as franchised outlets.** Shah's 2024 Item 20: zero franchises operating.

**Using the Item 7 low as a budget.** Great Greek's 2023 low end is a discounted fee for affiliated-brand owners; a first-time buyer pays $39,500. GDK's low is still inside a five-store commitment.

**Stopping at the league table.** The tables on this site compare disclosed fields across brands. They do not replace the footnotes, the exhibits, or counsel.

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Close of the first pass

- Receipt, delivery timestamp, and issue date in one folder.
- Items 5, 6, 7, 19, 20 copied onto the [comparison worksheet](/comparison-worksheet/), blanks left blank.
- Item 22 exhibits opened, not merely listed.
- Operator sample planned from the Item 20 lists.
- Counsel and an accountant retained before a signature date is treated as real.

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## Related reading

- [The fourteen-day rule](/fourteen-day-rule/) — when the clock starts
- [FDD vs franchise agreement](/fdd-vs-franchise-agreement/) — disclosure is not the contract
- [Comparison worksheet](/comparison-worksheet/) — the eight lines as a printable sheet
- [Item 19](/item-19/) — population before metric
- [Registration states](/registration-states/) — matching a public file to the PDF in hand

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