Franchise Disclosure Document (FDD) Legal Review
The Legal Importance of Reviewing Your Franchise Disclosure Document
Buying into a franchise is one of the most significant investments you can make. Whether you’re launching a small, service-based business or entering a national food chain, the first and most important step is to legally evaluate the Franchise Disclosure Document (FDD). This document contains the terms, risks, and obligations that will govern your relationship with the franchisor for years to come.
At Angiuli & Gentile, LLP, we provide comprehensive legal reviews of FDDs to ensure our clients fully understand their rights and potential liabilities before signing a franchise agreement. With over three decades of experience advising entrepreneurs and business owners, our attorneys help you make confident, informed decisions based on legal clarity—not just sales pitches.
What Is a Franchise Disclosure Document (FDD)?
The Franchise Disclosure Document is a legal disclosure required by the Federal Trade Commission (FTC) that franchisors must provide to prospective franchisees at least 14 days before a contract is signed or any money is exchanged. The purpose of this document is to protect franchise buyers by giving them full visibility into the business model, legal history, financial details, and operational expectations.
The FDD contains 23 separate items, including:
- Franchisor background and business experience
- Litigation and bankruptcy history
- Detailed cost breakdowns
- Franchisee obligations
- Territory rights and restrictions
- Conditions for renewal or termination
- Financial performance representations (if provided)
This is not marketing material—it’s a contractual roadmap with long-term implications for your business. Every franchisee should have the FDD reviewed by a knowledgeable franchise attorney before proceeding.
Why the FDD Is Central to Your Franchise Investment
The FDD is more than just a legal requirement—it’s the foundation of your franchise relationship. Everything from your rights as a franchisee to your potential for profitability is influenced by what’s included (and sometimes, what’s not included) in this document.
A well-reviewed FDD helps you:
- Understand your financial obligations, including hidden or variable costs
- Evaluate the track record and legal credibility of the franchisor
- Identify unfair or one-sided provisions that could harm your investment
- Clarify territory protections, renewal terms, and transfer rights
- Ensure the franchisor is in full compliance with federal and state law
A professional legal review uncovers red flags that might otherwise be missed and equips you with negotiation power or the insight to walk away from a bad deal.
The Legal Risks of Skipping an FDD Review
Many prospective franchisees assume the FDD is just routine paperwork, or that it’s “standard” across all franchise systems. That’s a dangerous misconception.
Failure to carefully review your FDD with an attorney can expose you to serious risks, such as:
- Being personally liable for franchise fees and operational losses
- Losing your territory due to encroachment or non-exclusive zones
- Getting locked into non-negotiable or one-sided contracts
- Being surprised by non-refundable upfront fees
- Facing litigation for breaching ambiguous performance standards
- Having limited or no legal options due to forced arbitration clauses
Our legal team helps you anticipate these issues before they affect your business. We bring both legal and strategic insight to the process—so you’re not just legally covered, but business-smart in your decision-making.
Key Sections of the FDD That Require Detailed Legal Review
While every part of the FDD must be read carefully, several sections are particularly critical from a legal standpoint. Here’s how we help:
Litigation History – Item 3
This section discloses whether the franchisor or its principals have been involved in litigation, including lawsuits filed by or against other franchisees. Multiple lawsuits or government investigations can signal red flags about the company’s stability or ethical practices.
We review these cases for:
- Franchise fraud allegations
- Wrongful terminations
- Misleading earnings claims
- Unresolved disputes that could impact your experience
Initial Investment Estimates – Item 7
Item 7 outlines the estimated costs to open and operate the franchise. However, many franchisors present overly optimistic or incomplete figures.
We break down:
- How realistic the estimates are based on your local market
- Whether any recurring fees are buried in the small print
- Whether third-party vendor agreements increase your real costs
Financial Performance Representations – Item 19
This optional section allows franchisors to disclose how other franchisees perform financially. If included, these claims must be substantiated. If excluded, that omission may be telling.
We help you:
- Assess the credibility and basis of earnings projections
- Identify vague or misleading language
- Cross-check claims with available financial statements
Renewal, Termination, and Transfer Rights – Item 17
Your ability to renew, sell, or exit your franchise is governed by this section. Often, franchisors insert restrictive clauses that reduce your flexibility or give them excessive power.
We assess:
- Whether renewal is automatic or subject to conditions
- The terms under which your franchise can be terminated
- Whether you can sell or transfer your franchise without penalty
Understanding Franchise Law at the State Level
Franchise laws vary significantly by state. Some states require registration, others only require filing or notice, and some have no additional requirements beyond the federal rules. These differences can greatly affect your legal rights.
New York Franchise Law
New York is a franchise registration state, which means all franchisors must file their FDD and obtain approval from the New York State Attorney General before selling franchises. Additional rules apply regarding earnings disclosures, franchisee protections, and renewal processes.
We assist clients in:
- Confirming whether the franchisor is registered to sell in New York
- Reviewing state-specific addenda to the FDD
- Identifying whether New York laws give you extra protections
- Resolving disputes under New York’s Franchise Sales Act
If you’re located in another state or purchasing a franchise that operates in multiple jurisdictions, we can provide a state-by-state franchise compliance review.
Why Choose Angiuli & Gentile, LLP?
At Angiuli & Gentile, LLP, our attorneys bring deep experience in franchise law, contract negotiation, and regulatory compliance. We’ve helped clients throughout Staten Island, New York City, and across the tri-state area navigate the complex world of franchising.
Our Services Include:
- Complete legal review of the Franchise Disclosure Document
- Detailed breakdown of key risks and obligations
- Review and redlining of the franchise agreement
- Consultation on territory, royalties, vendor relationships, and more
- Guidance on franchise disputes, litigation, or mediation
- Analysis of multi-unit or master franchise agreements
We don’t just interpret legal language—we help you make business decisions grounded in legal clarity and financial prudence.
How We Can Help
When you work with Angiuli & Gentile, LLP, you’re not just hiring legal counsel—you’re gaining a strategic partner committed to protecting your interests as a franchisee.
Here’s what you can expect:
- A personalized consultation tailored to your franchise opportunity
- A line-by-line legal review of the FDD and franchise agreement
- A plain-language summary of every key risk and obligation
- Recommendations for negotiation, red flags, and compliance concerns
- Ongoing support if you decide to move forward—or walk away
We aim to give you confidence, clarity, and control throughout your franchise journey.
Frequently Asked Questions (FAQs)
Do I really need a lawyer to review the FDD?
Yes. The FDD contains legally binding provisions that can affect your business success and expose you to personal liability. An experienced franchise attorney can help you understand these risks and advise you on how to respond.
Can the FDD be negotiated?
Some terms in the FDD and franchise agreement may be negotiable—especially if you’re an experienced operator, buying multiple units, or working with a smaller franchisor. We help identify areas where you may have leverage and guide negotiations.
What happens if the franchisor leaves out important information?
If a franchisor omits material information from the FDD—especially regarding earnings, fees, or litigation history—you may have grounds for legal action under federal or state law. We can help you determine if the omission violated the FTC Franchise Rule or other laws.
Is the FDD the same in every state?
While the core FDD is federally regulated, many states (including New York) impose their own registration requirements and legal standards. We ensure your FDD is compliant with both federal and state-level franchise laws.
What if I already signed the agreement—can I still get help?
Yes. If you’ve already entered into a franchise agreement and are experiencing problems, we can help you evaluate your legal options, including mediation, litigation, or exit strategies.
Contact Angiuli & Gentile, LLP Today
Before you invest in a franchise, protect yourself with a legal review by experienced franchise counsel. At Angiuli & Gentile, LLP, we are here to ensure your FDD is not just legally sound—but that it supports your long-term success as a business owner.
Contact Anguili and Gentile, LLP today or schedule a confidential consultation to get started.
