Free Franchise Agreement Review Checklist Template

FRANCHISE AGREEMENT AND FDD REVIEW CHECKLIST

Franchise: [BRAND]    Franchisor: [LEGAL NAME]    FDD issue date: [DATE]    Date FDD received: [DATE]

Note: Under the FTC Franchise Rule, franchisors must give you the Franchise Disclosure Document (FDD) at least 14 calendar days before you sign or pay. Several states also require registration or additional disclosure. This checklist is not legal advice; have a franchise attorney review before you sign.

A. TOTAL COST
[ ] Initial franchise fee (FDD Item 5): $______  Refundable? ______
[ ] Estimated initial investment range (Item 7): $______ to $______  Includes working capital? ______
[ ] Royalty (Item 6): ______% of gross sales, or $______ minimum
[ ] Advertising / brand fund contribution: ______%
[ ] Technology, software and other recurring fees: $______
[ ] Renewal, transfer and training fees: $______
[ ] Total annual fees as a percentage of projected sales: ______%

B. FINANCIAL PERFORMANCE (Item 19)
[ ] Does the FDD include financial performance representations? ______
[ ] Which outlets are included, and what share of the system do they represent? ______
[ ] Gross sales only, or also costs and profit? ______
[ ] Have you spoken to at least [5] current and [2] former franchisees (Item 20 lists contacts)? ______

C. SYSTEM HEALTH (Items 3, 4, 20, 21)
[ ] Litigation involving the franchisor or its management (Item 3): ______
[ ] Bankruptcy history (Item 4): ______
[ ] Outlet openings, closures, transfers and terminations over three years (Item 20): ______
[ ] Audited financial statements of the franchisor (Item 21): ______

D. TERRITORY (Item 12)
[ ] Exclusive, protected or no territory? ______
[ ] Can the franchisor sell online, through other channels or open company outlets in your area? ______
[ ] Minimum sales requirements to keep the territory? ______

E. SUPPLIES AND OPERATIONS (Items 8, 11)
[ ] Required suppliers and whether the franchisor earns rebates or markups: ______
[ ] Site selection, build-out and opening deadlines: ______
[ ] Training provided and who pays travel: ______
[ ] Can the operations manual change your obligations and costs? ______

F. TERM, RENEWAL AND EXIT (Item 17)
[ ] Initial term: ______ years. Renewal conditions and fees: ______
[ ] Must you sign the then-current agreement at renewal (possibly with higher fees)? ______
[ ] Transfer conditions, approval rights and transfer fee: ______
[ ] Franchisor's right of first refusal on a sale: ______
[ ] Grounds for termination and cure periods: ______
[ ] Post-term non-compete: length ______ and area ______ (check state law)
[ ] Obligations after termination: de-identification, buying back equipment, lease assignment: ______

G. PERSONAL RISK
[ ] Personal guarantee required? Spouse required to sign? ______
[ ] Arbitration clause, venue and governing law (often the franchisor's home state): ______
[ ] Limits on your right to join class actions: ______

H. NEXT STEPS
[ ] List of questions for the franchisor: ______
[ ] Attorney and accountant review booked: ______
[ ] Financing and lease terms aligned with the franchise term: ______

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This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.