FDD review.
Before you commit to a decade.
The Franchise Disclosure Document is the most important document you'll receive before signing a franchise agreement. Kontractually checks every mandatory disclosure requirement under the Franchising Code of Conduct.
No credit card required. First 3 reviews free.
What changes when you review the FDD properly.
You receive a 60-page FDD from a franchisor and spend a weekend reading it. You miss that the outlet closure rate over the last 3 years is 22% - buried in a table on page 41. You sign the franchise agreement without understanding the system's churn.
Kontractually extracts outlet turnover data and flags the 22% closure rate against your playbook threshold. You see the red flag in 3 minutes and ask the franchisor for an explanation before committing.
The FDD includes earnings projections showing $180K average revenue per outlet. You base your business plan on these numbers. After opening, you learn the projections were based on mature outlets in premium locations - not new franchisees.
Kontractually flags financial performance representations and checks whether the FDD discloses the basis for projections (outlet age, location type, sample size). You request clarification before relying on the numbers.
Your lawyer reviews the FDD for $3,500. The review takes 2 weeks. By the time the advice arrives, the cooling-off period is almost over and you feel rushed to decide.
Kontractually reviews the FDD in minutes against the Franchising Code's mandatory disclosure requirements. You use the full cooling-off period to make an informed decision - and only send targeted questions to your lawyer.
6 mandatory elements in every Franchise Disclosure Document.
The Franchising Code of Conduct (Schedule 1) prescribes the minimum content of an FDD. Key items: franchisor details and history, directors and associates, existing franchise system details (outlet numbers, closures, terminations over 3 years), litigation history, intellectual property disclosure, financial obligations (fees, charges, and what they cover), obligations on the franchisee, financial performance information (if provided), and contact details for existing franchisees. Kontractually checks FDDs for each mandatory disclosure element.
Financial performance representations in an FDD must be based on reasonable grounds and not be misleading under the ACL. However, they represent historical performance of other outlets, not a guarantee of what your outlet will achieve. The most reliable approach: contact existing and former franchisees (the FDD must include their contact details) and ask directly about their experience and financial performance. Kontractually flags FDDs that include earnings representations without clearly noting they are not guarantees.
The FDD must disclose outlets opened, closed, transferred, and terminated over the last 3 years. A high closure rate (above 10-15% annually) can indicate systemic problems - poor unit economics, franchisor-franchisee conflict, or market saturation. However, context matters: some closures are voluntary (franchisee retirement), some are transfers (business sold to new operator), and some are terminations for cause. Kontractually flags high turnover rates and distinguishes between closure types where the FDD provides that breakdown, so you can ask the right questions.
Under the Franchising Code, the franchisor must provide the FDD at least 14 days before you sign the franchise agreement or make any non-refundable payment. You also have a 7-day cooling-off period after signing a new franchise agreement (14 days for renewals). These are minimum periods - you can take longer. If the franchisor pressures you to sign quickly, that itself is a red flag. Kontractually helps you use this time effectively by reviewing the full FDD in minutes rather than days.
Kontractually reviews the FDD for completeness against the Franchising Code's mandatory requirements and flags common risk patterns - high outlet turnover, unsubstantiated earnings claims, missing disclosure items, and IP vulnerabilities. For a franchise investment of $100K-$500K+, legal advice on the franchise agreement itself is still recommended. The difference is that Kontractually reduces the scope of that advice: instead of paying a lawyer to read the entire FDD from scratch, you send them the specific issues Kontractually flagged. Most users report reducing their legal bill by 60-80% while getting better coverage.
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