1851

The F<a href="https://1851franchise.com/how-to-read-a-franchise-disclosure-document-2714764#stories">ranchise Disclosure Document</a> (FDD), a document consisting of 23 Items, provides potential franchisees with a detailed analysis of the franchise opportunity they are considering. Each of these sections is significant and should be read in detail, but when it comes to understanding the franchisor’s restrictions on sources of products or services and any specifications on territory, these topics can be reviewed thoroughly in Items 8 and 12, respectively. And as both of these Items directly <a href="https://1851franchise.com/navigating-understanding-negotiating-supplier-territory-and-customer-restrictions-fdd-items-8-12-2703067#stories">impact the profitability and long-term success of a franchise location,</a> it’s crucial that a prospective franchisee consult with a franchise lawyer. A lawyer can help navigate the agreement and FDD to make sure all of the terms are laid out and properly negotiated.&nbsp;Item 8, Restrictions on Sources of Products or Services, is important to maintain brand uniformity, and this is why this section of the FDD outlines where franchisees are able to purchase goods and services necessary to franchise units. <a href="https://franchise.law/franchise-disclosure-document/item-8/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-are-items-8-and-12-of-the-fdd-2718388" target="_blank" rel="nofollow">Franchise Law</a> notes that if the franchisor requires that franchisees purchase or lease any goods, Item 8 of the brand’s FDD must disclose any purchase obligations.&nbsp;Someone looking at Item 8 of an FDD should realize that this section outlines the service and sourcing standards that are currently in place across a brand’s system and that there is little to no wiggle room. Things to make note of include franchisors with loose guidelines (indicating lack of consistency across the brand) and franchisors that make a lot in royalties based on the products and services that franchisees buy.&nbsp;While Item 8 does not have leeway for change, Item 12 is a section that has a bit more flexibility. With many franchise systems operating within territories, it is important for a potential franchisee to understand Item 12 and where they are able to conduct business and solicit customers. When reviewing this Item, prospective franchisees should take note if they have an&nbsp; assigned protected territory or not and if there is room for expansion in nearby territories. As mentioned in Franchise Law, a franchisee can likely modify their territory when they renew their contract.When reading through Item 12, a prospective franchisee should pay close attention to if the territory is large enough to have a viable business and also have a thorough understanding of what the franchisor defines as protected territory. A protected territory does not always mean that the franchisee won’t have competition; in fact, the franchisor can still conduct business — just not brick and mortar — through multiple channels, such as online, mobile locations, airports and shopping malls.&nbsp;&nbsp;Both Items 8 and 12 are incredibly important to gauge the success of a franchise location and how the brand operates as a whole. By reading the fine print and understanding where a territory will be, if it can be negotiated and any costs and restrictions on products and services, a potential franchisee can best decide if a particular franchise business is right for them.&nbsp;

What are Items 8 and 12 of the FDD?

1851 Franchise

Items 8 and 12 of the Franchise Disclosure Document, Restrictions on Sources of Products or Services and Territory, are crucial sections to review to gauge the profitability and long-term success of a franchise location. 

what-are-items-8-and-12-of-the-fdd

Melting Pot

Photo of interior of Melting Pot restaurant

Lexington Herald Leader: This Restaurant Chain Eyes a Return to Lexington After 10 Years

melting-pot-return-to-lexington

Keke's Breakfast Cafe

Keke's Breakfast Cafe - John and Kimberly Ehrhard - 1851 Franchise

Empowering Leadership, One Pancake at a Time: How John and Kimberly Ehrhard Are Building a Franchise Legacy with Keke’s Breakfast Cafe

john-kimberly-ehrhard-kekes-franchise

Comfort Keepers

More Than a Caregiver: Loretta Smith's Support Extends to Fellow Caregivers, Clients and the Community

more-than-a-caregiver-loretta-smiths-support-extends-to-fellow-caregivers-clients-and-the-community

Photo of Melting Pot CEO John "JC" Crawford

Melting Pot Names New CEO, Celebrates 50th Anniversary With Continued Growth and Leadership Promotions

melting-pot-franchise-mid-year-2025

Layne's Chicken Fingers

Texas Layne’s Franchisee Secures Real Estate in Austin, Set To Open Early Next Year

texas-laynes-franchisee-secures-real-estate-in-austin-set-to-open-early-next-year

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Drone Delivery Takes Flight in QSR: The Future of Franchise Operations?

drone-delivery-takes-flight-in-qsr-the-future-of-franchise-operations

Chick-fil-A Tops Customer Satisfaction Rankings for 11th Year as Challenger Brands Gain Ground

chick-fil-a-tops-customer-satisfaction-rankings-for-11th-year-as-challenger-brands-gain-ground

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

Rising Jobless Claims Could Signal Challenges — and Opportunities — for Franchising

rising-jobless-claims-affect-franchising

Hardee’s Lawsuit Highlights the Risk of Going Off-Model in Franchising

hardees-franchise-lawsuit-paradigm-investment-group

Busy Bee Jumpers Franchise Costs, Fees, Profit and Data for 2025

busy-bee-jumpers-franchise-costs-fees-2025

How-petbar-Makes-Pets-and-Their-Owners-Happy-as-Part-of-the-Family-in-a-Clean-and-Fun-Environment

How petbar Makes Pets and Their Owners Happy as Part of the Family in a Clean and Fun Environment

petbar-franchise-opportunity-boutique-pet-grooming

petbar Franchisees Win the $6.89B Global Market With Complete Transparency, Self-Service and Membership Models, Creating the Happiest Place for Dogs

petbar-franchise-opportunity

Photo of Happinest Brands vans and teams standing together

Happinest Brands Closes Strong Q1 With Strategic Growth, System-Wide Enhancements

happinest-brands-q1-2025-growth

The Ultimate Guide to Selling Franchises: How To Create a Strong Incentive

how-to-build-strong-incentives-to-attract-prospective-franchisees

How Vishal Juneja Turned a Family Tradition Into a Paris Baguette Franchise

How Vishal Juneja Turned a Family Tradition Into a Paris Baguette Franchise Built on Heart and Community

What are Items 8 and 12 of the FDD?

MORE STORIES LIKE THIS