1851

In a few months, many franchisors will begin working on next year’s <a href="https://1851franchise.com/what-is-an-fdd--2705192">Franchise Disclosure Document</a>, a comprehensive record of information about the organization that is shared with franchise prospects. The FDD contains several hundreds of pages of franchise information, which includes <a href="https://1851franchise.com/how-to-read-an-fdd-101-a-basic-introduction-to-the-franchise-disclosure-document-2712016">23 sections, or items, and numerous additional exhibits</a>.<a href="https://www.forbes.com/sites/forbescoachescouncil/2020/07/20/covid-19-raises-questions-about-the-upcoming-franchise-disclosure-document/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=covid-19-and-item-19-how-the-pandemic-might-impact-upcoming-franchise-disclosure-documents-2713537#1e4cbee16dd3" target="_blank" rel="nofollow">As a recently posted article in Forbes points out</a>, “Due to the negative impact on many industries caused by the Covid-19 pandemic, the information shared in the 2020 FDD will be significantly different from previous years. What the FDD will look like and how it should be interpreted will be one of the big questions in the franchise community over the next year.”Several sections of the FDD will likely be impacted, including what many consider to be the most important section, <a href="https://1851franchise.com/the-franchise-bible-item-19-2703090">Item 19</a>.&nbsp;<blockquote>“Franchisors in the restaurant, hotel, beauty and fitness industries have been profoundly impacted," the article said. "A lot of these locations were forced to close for several months, and therefore will not have a full year of earnings. Even though some restaurants remained open for carryout or delivery or have reopened their dining rooms at partial capacity, their sales numbers took a substantial hit over that time and do not represent the normal volume of sales that would be expected. This is going to create a complex set of challenges that franchisors have never faced when putting together Item 19 of the FDD.”</blockquote>Since the pandemic may have forced some franchise locations to close while delaying plans for opening new units, the brand’s Item 20, which outlines the number of operating units, will be significantly different than previous years. <a href="https://1851franchise.com/tipsforbuyingafranchise/understanding-fdd-item-21-audited-financial-statements-2703110">Item 21 presents the audited financial statements</a> for the franchisor for the past three years, and there is no doubt 2020 will prove to be an outlier.&nbsp;Much of the language in a brand’s FDD will also likely need to be altered to better reflect a post-pandemic landscape, the article notes. Moving forward, franchisors will need to work hard to update their FDD and meet the needs of prospective franchisees.&nbsp;<blockquote>“These are new and unexpected challenges and there is no precedent for handling the challenges that the upcoming FDD will present," the article continued. "One option is to essentially mark an asterisk next to everything in 2020 and recognize the data is an outlier. In Item 19, they could share the 2018, 2019 and 2020 numbers, thereby showing the norm of the previous years and then disclosing the unusual year of 2020. Either way, franchisors work hard to present a linear progression of growth and stability for the benefit of their business and the disclosure. That linear path will likely be shattered in 2020.”</blockquote>To read the full Forbes article, <a href="https://www.forbes.com/sites/forbescoachescouncil/2020/07/20/covid-19-raises-questions-about-the-upcoming-franchise-disclosure-document/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=covid-19-and-item-19-how-the-pandemic-might-impact-upcoming-franchise-disclosure-documents-2713537#1e4cbee16dd3" target="_blank" rel="nofollow">click here</a>.

COVID-19 and Item 19: How the Pandemic Might Impact Upcoming Franchise Disclosure Documents

1851 Franchise

Putting together the FDD for 2021 will present an unprecedented challenge for many franchisors, especially those who operate in the hardest-hit industries.


covid-19-and-item-19-how-the-pandemic-might-impact-upcoming-franchise-disclosure-documents

Griswold

Home for the Holidays: How Griswold Helps Families Stay Connected and Cared For During the Most Important Time of Year

home-care-holidays-griswold-support

United Water Restoration Group

image of water restoration group Air Force veteran Nathan Sherman

Is United Water Restoration Group the Right Franchise Opportunity for First-Time Business Owners?

united-water-restoration-group-first-time-business-owners

Paris Baguette

image of Paris baguette franchise owner success

The Recipe for Success: A Step-By-Step Guide to Opening a Paris Baguette Franchise

paris-baguette-franchise-process

Onigilly Japanese Kitchen

Image of Onigilly restaurant franchise Reports Record 2025 Growth in Fast Casual

Onigilly Japanese Kitchen Closes 2025 With Record Sales Growth and Expanding Franchise Pipeline

onigilly-franchise-2025-growth-fast-casual

Pool Scouts

Pool Scouts Franchise - 2025 Annual Convention - Dallas TX - 1851 Franchise

Pool Scouts' 2025 Conference Sets the Stage for the Brand's Next Phase of Growth

pool-scouts-2025-conference-recap

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

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

Domino's Franchise - North Pole - Dec 2025 - 1851 Franchise

Domino’s Pizza Brings Delivery Cheer to North Pole, Alaska

dominos-pizza-franchise-north-pole-alaska

California Pizza Kitchen’s Sale Is the Latest in the Era of PE-Backed Turnarounds in Franchising

california-pizza-kitchens-sale-is-the-latest-in-the-era-of-pe-backed-turnarounds-in-franchising

Buying a fitness franchise, people exercising

Boutique vs. Big Box Gym Franchises: Which Offers Best ROI in the $7 Billion Fitness Market?

buy-fitness-franchise-boutique-big-box-comparison

Pieology Pizza Enters Chapter 11 Following Costly Bid To Save Struggling Stores

pieology-pizza-files-chapter-11-bankruptcy

CNBC: McDonald’s Will Assess if Franchisees Are Offering Value for Customers Under New Standards

mcdonalds-franchise-standards-value-metric

Paris Baguette Welcomes Zac Sulma as New Chief Operating Officer

new-coo-zac-sulma

Bed Bath & Beyond - Franchise Expansion - Retail Strategy - 1851 Franchise

Bed Bath & Beyond Launches Franchise Model as Part of Comeback Strategy

bed-bath-beyond-franchise-expansion-retail-strategy

Senior Entrepreneurship - Franchising - 1851 Franchise

Senior Entrepreneurship Is Rising — And Franchising Is a Key Outlet

senior-entrepreneurship-franchising-silver-startups

AI-related job cuts, October U.S. job cuts, American job cut record

AI-Fueled Layoffs Reshape the U.S. Job Market — And Highlight Franchising’s Resilience

ai-job-cuts-franchising-path-forward

Photo of group of dogs standing together in day care facility

Top Pet Boarding and Day Care Franchise Opportunities for 2025

top-pet-boarding-daycare-franchises

Do You Qualify? A Look at the Chick-fil-A Franchise Requirements

do-you-qualify-a-look-at-the-chick-fil-a-franchise-requirements

The Top 15 Pet Supplies and Retail Franchises for 2025

the-top-15-pet-supplies-and-retail-franchises

The Top 15 Pet Wellness and Vet Care Franchises for 2025

top-pet-wellness-franchise-opportunities

Ellianos Coffee Franchise Costs, Fees, Profit and Data for 2025

ellianos-coffee-franchise-costs-fees-profit-and-data

image of michael panos and michel panos, owners of mellow mushroom in Atlanta

What Makes Mellow Mushroom a Strong Franchise Investment? Insights From the Panos Family’s Metro Atlanta Portfolio

mellow-mushroom-franchise-panos-restaurant-group-metro-atlanta

COVID-19 and Item 19: How the Pandemic Might Impact Upcoming Franchise Disclosure Documents

MORE STORIES LIKE THIS