While on the path toward franchising, you’ll encounter a ton of documents and information that will help you come to a final decision. Few are as important as the Franchise Disclosure Document, aka FDD. This simple three-letter term plays a pivotal role in helping you determine whether the franchise you’re exploring is the right choice for your entrepreneurial journey.
If you’re new to the world of franchise ownership, don’t skip over this crucial discovery step! Take a closer look at everything the SpeedPro FDD can provide.
What is a Franchise Disclosure Document?
The Franchise Disclosure Document (FDD) is a legal document that outlines information about a franchise opportunity. It serves as a comprehensive resource to help you to gain a deep understanding of the business model, investment requirements and ongoing relationship between you as a franchise owner and the company.
FDDs have a standard set of 23 items, each of which provide specific information about the franchise system. You can expect to learn about the franchisor’s background, financial performance, costs and fees and other essential items.
A franchise must update their FDD annually. This means that the FDD will always detail the most up-to-date information available. Additionally, a franchise business is mandated by the Federal Trade Commission (FTC) to provide prospective franchisees with this document at least 14 days prior to signing the Franchise Agreement.
At SpeedPro, our FDD is yet another indicator of our proven model and success of our network. You’ll receive the SpeedPro FDD as you work through our discovery process— after submitting a request for consideration and before Discovery Day.
Why is the FDD Important?
Think of the FDD as your roadmap to informed decision-making. This document isn’t just about legalities. It empowers you to determine if the franchise opportunity aligns with your personal and financial goals. No two franchise systems are exactly the same—and the FDD will make this clear. By reviewing, you’ll come to understand what to expect from the business relationship.
Many people turn to the FDD to determine whether they can afford a franchise opportunity and to gauge the earnings potential. Reviewing the costs and performance information in the FDD is essential to ensuring your investment makes sense.
Beyond financial information, the FDD holds information about franchisor experience, the territory selection process and the training and support provided. These sections will offer valuable insights that will help you determine if this is the right franchise opportunity for you on a day-to-day basis.
Key Areas to Focus on in the FDD
The FDD holds a lot of information to review. However, there are some key areas we recommend you pay close attention to as you make your decision.
- Franchise Background and Financials (Items 1, 2, 21): Understanding our experience and financial health is crucial. Items 1 and 2 detail our franchisor history, management team, affiliates and overall business philosophy. Item 21 holds audited financial statements, providing you a clear picture of our year-over-year financial stability. A strong and experienced franchisor with a solid financial foundation translates to a more robust support system for you as an owner.
- Fees and Costs (Items 5-7): Before signing on the dotted line, it’s important to understand the full financial picture. Items 5-7 outline the initial investment required to open your franchise, including initial franchise fees, royalty fees and ongoing marketing fees. Item 7, specifically, provides a low and high estimate of your initial investment—how much it costs to open and operate your own SpeedPro Studio.
- Training and Support (Item 11): Launching and running a successful franchise requires proper training and ongoing support. Item 11 details the training programs we offer to equip you with the knowledge and skills you need to operate your business successfully. This may include initial training, ongoing operational support and marketing guidance. Also review Item 22, the Franchise Agreement, for further details on our specific training and support obligations.
- Territory and Restrictions (Item 12): Your franchise agreement grants you the right to operate in a specific geographic territory. Item 12 clearly defines the boundaries of the territory and outlines any restrictions on where you can locate your business or who you can sell to. Understanding your territory is important for evaluating your potential customer base and overall market opportunity.
- Financial Performance Representations (Item 19): It’s important to note that not all franchisors include financial performance representations in their FDDs. This section (Item 19) can provide information on projected sales, income or profits—essentially, how much you can make. However, remember this is just an estimate and not a guarantee of your future earnings.
- Existing Franchisee Information (Item 20): The FDD might not tell the whole story, so we encourage you to connect with our existing franchisees. Item 20 provides you with contact information for existing Studio owners within your network. Talking to them firsthand can offer valuable insights into their experiences, the challenges and rewards of operating a franchise and the overall SpeedPro culture.
Reviewing the FDD is a very important way to learn more about SpeedPro and what operating your own Studio will be like. We’re also happy to answer any questions you might have about our business, so you can rest assured you’ve made the right decision.
Contact SpeedPro today to learn more about our large-format print franchise opportunity!