Every franchisor in the U.S. must give you a Franchise Disclosure Document (FDD) at least 14 days before you sign or pay anything — it's required by the FTC Franchise Rule (16 CFR 436). It runs 200-plus pages across 23 standardized items. You don't need to read all of them closely. Six do most of the work.
Item 5 & Item 6 — the fees
Item 5 is the initial franchise fee — a one-time payment to the franchisor, often $20,000–$45,000. Item 6 is the one that matters more over time: every ongoing fee. Look for the royalty and the advertising/brand-fund contribution, both usually charged as a percentage of gross sales. Add them together — 8–12% is common — and remember that's off the top line, before any of your costs. Item 6 is also where unusual structures hide: gross-profit splits, per-transaction fees, technology fees, and required local marketing minimums.
Item 7 — the real cost to open
This is the estimated total initial investment, as a low-to-high range, including build-out, equipment, opening inventory, and typically a few months of working capital. Take the high end seriously — and remember that Item 7 is the franchisor's estimate, not a cap.
Item 19 — the earnings claim (or the silence)
Item 19 is the financial performance representation, and it's optional. This is the most important page in the document precisely because of that. If a brand makes no Item 19, you have no franchisor-backed sales or profit figure to underwrite against — a meaningful red flag. If it does, read the fine print: Is it an average or a median? Of all units, or a cherry-picked subset? Does it exclude closed locations? Is it revenue (almost always) or actual profit (almost never)? An impressive Item 19 average can still hide a wide floor.
Item 20 — turnover
Item 20 lists outlet counts and, crucially, transfers, terminations, and closures over the past three years. A brand opening lots of units while quietly closing nearly as many is telling you something the growth chart won't. Compare openings to closures, not just the total.
Item 21 & the exhibits — the franchisee list
Tucked into the exhibits is a list of current — and often former — franchisees with contact details. This is the single most valuable page for a serious buyer. Call them. Ask what they actually net, what surprised them, and whether they'd do it again. Former franchisees are especially candid.
The FDD is written to protect the franchisor legally — but read correctly, it's the best diligence tool you have.
Put it to work
We read these items for you on each franchise file and line them up side by side in the directory — including which brands disclose Item 19 and which don't. Then model your own numbers. But nothing replaces reading the complete, current FDD of the brand you're considering and having a franchise attorney review it before you sign.