1851

A major step in deciding whether to franchise with a brand is reading the franchise disclosure document. The FDD is a window into the inner workings of a brand and contains tons of relevant information regarding its franchise opportunity.

As such, it&#39;s important to have a solid grip on the document before making what is often a monumental life decision for many entrepreneurs. <a href="https://1851franchise.com/" style="text-decoration-line:none" target="_blank">1851 Franchise</a> caught up with franchisors to learn some of the most common mistakes franchise candidates make when reading an FDD and the most common questions they receive. 

Not doing due diligence 

Prospective franchisee candidates should make sure they are putting in the time and effort to learn as much as they can about a brand before ever getting to the FDD. 

&ldquo;One common mistake is not doing proper due diligence in exploring the opportunity,&rdquo; <a href="https://www.ubreakifix.com/franchising?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-top-5-mistakes-franchise-candidates-make-when-reading-fdds-2709431" target="_blank" rel="nofollow" style="text-decoration-line:none" target="_blank">uBreakiFix</a> VP of Franchising Todd Evans said in an email. &ldquo;Take advantage of all the information at hand and don&#39;t be afraid to ask questions if you have them.&rdquo;

Not understanding the FDD&rsquo;s core purpose

&ldquo;The biggest mistake [candidates make] would be not understanding what the FDD is all about,&rdquo; <a href="https://drphonefixfranchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-top-5-mistakes-franchise-candidates-make-when-reading-fdds-2709431" target="_blank" rel="nofollow" style="text-decoration-line:none" target="_blank">DrPhoneFix</a> COO Timothy Phelps said. &ldquo;It&rsquo;s there to protect the name of the company.&rdquo; 

Regarding his brand&rsquo;s FDD, Phelps acknowledged there&rsquo;s a lot of detailed information and prospective franchisees do read the fine print, they just don&rsquo;t understand it. That understanding is crucial, Phelps said, because the FDD outlines the system franchisees will be expected (and legally obliged) to follow. 

&ldquo;We put eight years into building [DrPhoneFix], and it&rsquo;s a proven brand and it&rsquo;s a proven industry,&rdquo; Phelps said. &ldquo;If you follow the system, you&rsquo;ll be successful. If you start making up your own rules and doing your own things without communicating, you&rsquo;re most likely going to fail, so it&rsquo;s important that you follow the system.&rdquo; 

Not reading the FDD thoroughly 

All of the information contained in an FDD is there for a reason, so <a href="https://1851franchise.com/tips-for-reading-a-franchise-disclosure-document-franchisors-and-franchisees-weigh-in-2709376" style="text-decoration-line:none" target="_blank">prospective franchisees will only benefit from carefully examining it</a>. 

&ldquo;I would just say that [franchise candidates] need to be sure to thoroughly read and understand the document,&rdquo; <a href="https://www.nothingbundtcakes.com/franchising/about?utm_source=1851franchise.com&utm_medium=article&utm_campaign=the-top-5-mistakes-franchise-candidates-make-when-reading-fdds-2709431" target="_blank" rel="nofollow" style="text-decoration-line:none" target="_blank">Nothing Bundt Cakes</a> Chief Development Officer Chris Bremer said in an email. &ldquo;Sometimes people make assumptions or extrapolations off of surface-level information, which may not be the best approach.&rdquo; &nbsp;

Not reviewing the FDD with an attorney

It is of great benefit for prospective franchisees to seek assistance in comprehending the FDD. 

&ldquo;Prospective franchisees should keep in mind that this document covers many aspects of the business and has great information included to help them learn,&rdquo; Bremer said. &ldquo;Everyone should seek whatever assistance they feel will help them understand this document fully.&rdquo; 

Getting legal help might also be a good idea, franchisors believe. 

&ldquo;[Franchise candidates] should always have an attorney review [the document with them] before they really get involved,&rdquo; Phelps said. &ldquo;You get a 15-day grace period to do this stuff, and I think that&rsquo;s important so everything is asked up front and resolved from the very beginning.&rdquo;

This also means devoting the proper amount of time to reviewing the document, they explained. 

&ldquo;It&#39;s a large document, and it can be overwhelming, so be sure to give yourself ample time to review it,&rdquo; Evans said. &ldquo;<a href="https://1851franchise.com/the-differences-between-an-fdd-and-a-franchise-agreement-2709317" style="text-decoration-line:none" target="_blank">We encourage prospective franchisees to seek legal counsel and to have an accounting team review the document along with them</a>.&rdquo;

Not asking questions

Prospective franchisees should not be afraid to ask questions, Phelps, Bremer and Evans noted. While the most common questions they receive vary based on each concept&rsquo;s specifics, there are some common threads that run through them all.

Along with getting assistance in the review process, asking questions is of paramount importance for Phelps. 

&ldquo;The biggest things are having somebody else look at the FDD and freely asking questions if you&rsquo;re concerned about anything,&rdquo; he said. &ldquo;Don&rsquo;t hesitate to ask.&rdquo;

One of the most common questions Phelps and his team get from prospective franchisees is whether DrPhoneFix has to be an owner-operator business or if they can be an absentee owner. 

&ldquo;That&rsquo;s one of the biggest questions I get, and what I feel what they need to understand is that every business needs to be run by a good management team,&rdquo; he said. &ldquo;If there&rsquo;s strong support and a good management team in place, any business could be run very successfully. At the end of the day, I don&rsquo;t think anyone is a silent owner.&rdquo;

Common questions also revolve around finances, Bremer added. 

&ldquo;Questions mostly center around costs and some of the various items related to business requirements and financial data,&rdquo; he explained. 

Prospective franchisees, of course, are also interested in revenue potential. 

&ldquo;The most common question is &lsquo;How much money can I make?&rsquo;&rdquo; Evans said. &ldquo;The FTC rules allow franchisors to include a financial performance representation (FPR) in Item 19 of the FDD. Whenever we get this question, we tell potential franchisees that our FDD contains an FPR. We also tell them, however, that they should consider the entire FDD and not just item 19 when looking at a franchise opportunity.&rdquo;

Avoiding making these mistakes gives prospective franchisees a better chance of accurately assessing an FDD to learn whether the franchise opportunity they&rsquo;re exploring is actually the right fit for them. Doing so, in turn, <a href="https://1851franchise.com/nick-powills-royalties-are-greater-than-fees-2709235" style="text-decoration-line:none" target="_blank">sets both franchisor and franchisee up for a better, more lucrative long-term relationship</a>.

The Top 5 Mistakes Franchise Candidates Make When Reading FDDs

1851 Franchise

Franchisors share the common mistakes they see and the common questions they receive regarding franchise disclosure documents. 

the-top-5-mistakes-franchise-candidates-make-when-reading-fdds

TruBlue Home Service Ally

Why TruBlue is the Ideal Franchise for Multi-Unit Owners: Scalable Growth With a Purpose

why-trublue-is-the-ideal-franchise-for-multi-unit-owners-scalable-growth-with-a-purpose

Onigilly Japanese Kitchen

Koji Kanematsu Turned a 2,000-Year-Old Japanese Staple Into One of the Most Scalable Restaurant Franchise Models

koji-kanematsu-turned-a-2000-year-old-japanese-staple-into-one-of-the-most-scalable-restaurant-franchise-models

Lindora

Celebrating the Nurse Behind the Mission: How Melinda Endricks Is Powering Lindora’s Growth and Impact Nationwide

celebrating-the-nurse-behind-the-mission-how-melinda-endricks-is-powering-lindoras-growth-and-impact-nationwide

Sola Salons

Sola Salons Targets Chicago for Strategic Franchise Growth

sola-salons-targets-chicago-for-strategic-franchise-growth

Melting Pot

Photo of Melting Pot white chocolate fondue

How Melting Pot Franchisees Drive Year-Round Success Through Strategic Promotions and Local Marketing

melting-pot-franchise-year-round-success

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 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

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands - 1851 Franchise

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands

doordash-acquistions-deliveroo-sevenrooms

Crumbl Franchise Investment - TSG Consumer Partners -  1851 Franchise

TSG Consumer Partners Takes Minority Stake in Crumbl, Signaling Franchise Growth Potential

crumbl-franchise-investment-tsg-consumer

Yum Brands Reports Strong Q1 Results with Big Boost from Taco Bell

yum-brands-reports-strong-q1-results-with-big-boost-from-taco-bell

QSR: McDonald’s Gains Momentum With Chicken Innovation, Value Deals and Franchisee Support

mcdonalds-franchise-recovery-chicken-strategy-value-deals-2025

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

District Taco Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-district-tacos-franchise-costs-fees-profit-and-data

HTeaO Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-hteaos-franchise-costs-fees-profit-and-data

Lumin Lash Franchise Deep Dive - Costs, Fees, Profit and Data - 1851 Franchise

Lumin Lash Franchise Costs, Fees, Profit and Data for 2025

lumin-lash-franchise-deep-dive

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

Layoffs Surge to Pandemic-Era Highs, Opening Doors for Franchise Growth

layoffs-surge-to-pandemic-era-highs-opening-doors-for-franchise-growth

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchisee spotlight graphic with photo of Amy Lepke and family and Papa Murphy's logo

After 14 Years as a Stay-At-Home Mom, Amy Lepke Returned to Papa Murphy’s — This Time as an Owner

papa-murphys-franchise-amy-lepke

Franchisee Spotlight with Micki Waters and Papa Murphy's Logo

Work Mom: How Micki Waters Became a Mother Figure to Her Entire Papa Murphy’s Team

work-mom-how-micki-waters-became-a-mother-figure-to-her-entire-papa-murphys-team

Franchisee spotlight image with photo of Robert Trujillo and UWRG logo on blue background

How Robert Trujillo Expanded His Construction Business With UWRG

how-robert-trujillo-expanded-his-construction-business-with-uwrg

The Top 5 Mistakes Franchise Candidates Make When Reading FDDs

MORE STORIES LIKE THIS