Free Franchise Agreement Review Checklist Template
A franchise agreement and FDD review checklist covering fees, Item 19, territory, supplies, renewal, transfer, termination and post-term non-compete.
A franchise agreement review checklist helps a prospective franchisee check the Franchise Disclosure Document and agreement before signing. Franchise agreements are drafted by the franchisor and rarely negotiated, so understanding the fees, territory, termination and exit terms is essential.
Fill in this template online
Answer the blanks, choose the options, see a live preview and download your completed document. Free, no account needed.
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: ______ --- 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.
When to use this template
- Evaluating a franchise before signing or paying any fees.
- Comparing two franchise offers.
- Preparing questions for a franchisor and for current franchisees.
How to fill it in
- Record the date you received the FDD; you must get it at least 14 days before signing.
- Work through each FDD item listed and write the figures in.
- Call current and former franchisees from Item 20.
- Calculate total recurring fees as a share of expected sales.
- Book a franchise attorney and accountant before signing.
Key clauses to check
- Item 19
- Earnings claims are optional and often limited; check which outlets they cover.
- Territory
- "Protected" territory can still allow online or company sales in your area.
- Renewal
- You may have to sign a new agreement with higher fees.
- Transfer
- Franchisor approval and fees affect your ability to sell.
- Post-term non-compete
- Can stop you running a similar business after you leave; state law varies.
Frequently asked questions
What is an FDD?
The Franchise Disclosure Document, a 23-item disclosure the FTC requires franchisors to give at least 14 days before you sign or pay.
Can you negotiate a franchise agreement?
Some terms can be negotiated, especially for multi-unit deals, but many franchisors keep core terms fixed.
What does Item 19 of an FDD show?
Any financial performance representations the franchisor chooses to make, such as average sales of certain outlets.
Want to check if a contract is fair before you sign?
If someone sent you a franchise contract, don't guess. We flag risky clauses in plain English, tuned to your state, with a downloadable report and suggested-fix redline.
More Business templates
This free template is general information, not legal advice, and is no substitute for a qualified attorney. Laws vary by state; have it reviewed by a lawyer before you use or sign it.