CFC CFC Franchise Due Diligence & Disclosure Documents

Question 1

How many calendar days before signing a franchise agreement or paying any money must a franchisor provide the FDD to a prospective franchisee under FTC rules?

Accepted Answer

14 days

Answer

7 days

Answer

10 days

Answer

30 days

Question 2

How many items are contained in a standard FDD?

Accepted Answer

21

Answer

19

Answer

23

Answer

25

Question 3

Which FDD item lists all current and former franchisees, including their contact information?

Accepted Answer

Item 20

Answer

Item 18

Answer

Item 22

Answer

Item 19

Question 4

What is the primary purpose of a franchisee validation call during due diligence?

Accepted Answer

To gather candid firsthand feedback from existing franchisees about their experience

Answer

To negotiate the franchise fee with the franchisor

Answer

To complete the required FDD review period

Answer

To receive the franchisor's Item 19 disclosure

Question 5

What does Item 12 of the FDD address?

Accepted Answer

Territory rights and exclusivity provisions

Answer

Computer systems requirements

Answer

Franchisee obligations

Answer

Renewal terms

Question 6

Which FDD item discloses any pending or prior litigation involving the franchisor or its principals?

Accepted Answer

Item 3

Answer

Item 1

Answer

Item 5

Answer

Item 9