FDD Update Questionnaire

FDD Update Questionnaire

ITEM 1 – Corporate Information/Special Industry Laws

ITEM 2 – Officers, Directors, Managerial Personnel

3. Please review the individuals listed in Item 2 of your FDD and confirm that all Franchisor’s officers, directors, partners, and each person who will have management responsibility relating to the sale or operation of the franchise system are included. Please review each person’s title, position and provide an updated Management Questionnaire for each person even if that person is currently included in the FDD.

ITEM 3 – Litigation/Arbitration

ITEM 4 – Bankruptcy

ITEM 5 – Initial Fees

6. Please review your Initial Franchise Fee and Development Fees and advise whether you plan to make any changes.

ITEM 6 – Other Fees

8. Please review in detail your current Item 6 fees and make sure all fees a franchisee would pay to Franchisor or any affiliate are included and up-to-date. Provide all changes that need to be made. You may need to contact required vendors for up-to-date pricing as well.

ITEM 7 – Initial Investment

9. Please review your current Item 7 chart(s) in detail. Do any changes need to be made to any of the initial investment ranges based on your experience and the experience of your franchisees and multi-unit developers in opening outlets during 2023? Have all cost a franchisee can expect been considered and included? Have you updated the initial investment ranges due to inflation, current cost of materials, inventory and labor cost or shortages? We suggest that you request your new franchisees and multi-unit developers give you a list of the expenses they actually incurred to open their franchised businesses during 2023.

ITEM 8 – Sources of Products and Supplies

11. What amount of revenue did Franchisor collect from required purchases sold by Franchisor to franchisees in 2023?

13. What amount of revenue did any affiliate of Franchisor collect from required purchases sold by the affiliate to franchisees in 2023?

14. What amount of revenue (including any rebates, cash back, profits, discounts, or other consideration) did Franchisor or an affiliate collect from third party vendors based on required purchases franchisees made from the third-party vendor? Please describe each vendor separately.

ITEM 10 – Financing

ITEM 11 – Manual Table of Contents/Training Chart

22. Of the amount spent from the Brand/Marketing Fund in 2023,

ITEMS 13 and 14 – Trademarks, Patents and Copyrights

ITEM 18 – Public Figures

ITEM 19 – FINANCIAL PERFORMANCE REPRESENTATIONS

ITEM 20 – Units and Franchisee Information

27. Please provide a detailed list of all franchisees who have signed franchise agreements since January 1, 2023 including the:
a. Name of the franchisee who owned the franchise as of December 31, 2023 (the individual or entity that signed the franchise agreement or who was assigned the franchise agreement);
b. Date the franchise agreement was signed;
c. Date franchisee opened (if they have not opened yet please state as such);
d. Franchisee location address and territory (or city/state unit will be located if unknown);
e. Franchisee’s email address and telephone number;
f. Amount total each franchisee paid in franchise fees (if a developer and paid for a development agreement, please provide); and
g. Whether the franchisee is part of a multi-unit development agreement.

Please provide the following:

a. Name of the entity that owns the location;
b. State of incorporation;
c. Principal place of business address;
d. Date the location was opened; and
e. Address of the location (if different than the above).

Please provide the following:
a. The location that was transferred;
b. The name of the previous franchisee (individual/entity); and
c. The name of the current franchisee (individual/entity).

Please provide the following for each franchisee:
a. Name of the franchisee who was terminated, not renewed or ceased operations;
b. Location of the franchisee who was terminated, not renewed or ceased operations;
c. Why the franchisee was terminated, not renewed or ceased operations;
d. Date the franchisee was terminate, not renewed or ceased operations; and
e. The former franchisee’s personal contact information including a telephone number and personal email address.

please provide:
a. Name of the franchisee who was reacquired;
b. Location of the unit that was reacquired by Franchisor; and
c. Date the location was reacquired by Franchisor or an affiliate.

please provide the following:
a. The address of the location that was sold to the franchisee;
b. The name of the franchisee that acquired the location; and
c. The date the location was sold to the franchisee.

Please provide the following :
The address of the location that was closed; and
The date the location was closed.
34. Provide your projected new franchisee units for 2024 including :
a. The number of franchisee units you expected will sign a franchise agreement in 2024 in each state. For example, you may advise that you expect to sign 5 new units in Florida, 1 in Illinois and 4 in California in 2024.
Please provide the following :
a. Whether Franchisor created, sponsored or endorsed the organization;
b. Name of the organization;
c. State of incorporation of the organization; and
d. Whether the organization has requested to be included in the FDD.

ITEM 21 – financial statements

38. Every year you required to include updated financial statements audited by an independent certified or licensed public accountant who is permitted under the laws of such person’s state to prepare opinions on audited statements using generally accepted accounting principles of United States. Please provide your updated audited financial statements along with a written consent letter signed by your auditor as soon as available. Please note that your FDD cannot be updated and issued without these financial statements. Reach out to your auditor to start your audit process as soon as possible.

ITEM 22 – Agreements

State registrations, filings and notices

Your franchise offering is currently registered in multiple registration states that will require renewals. We recommend that we submit these renewals as early as possible. In order to keep your registrations current and avoid any gap in registration we will need ample time to complete each filing and registration in each state. The FDD will need to be fully updated (including having your updated audited financial statements) and we will have to show each state every change that was made to your FDD from the previously registered FDD in that state. Every year we need to provide the states with updated forms to submit your renewal applications. Prior to your FDD update being completed, we will be providing the following forms to you. Once received, please return them to us as soon as possible (please note that some forms require you to sign in front of a notary public):

1. The Uniform Franchise Registration Application and Certification Page;
2. Franchisor’s Costs and Source of Funds Form (we will ask that you review last year’s form and provide any updates);
3. The Uniform Consent to Service of Process Form with a Corporate Acknowledgement for the Consent to Service of Process.
4. A Franchise Seller Disclosure Form for each person (including all individual and sales organizations/brokers selling on your behalf) who will be offering the franchise for sale in any of the registration states; and
5. Some state specific forms for renewals in states such as New York, California, and Washington.

Additionally, if there are any additional state registrations you would like to pursue in 2024, please advise, so we can ensure to provide you with the proper forms for each state.

Advertising

Do you have any advertising or marketing materials directed towards prospective franchisees (other than posted on your website) in any state? Specially, if you are advertising in any registration state, please advise. Please send us copies of all advertisements, as they must be filed in certain states as part of the registration process.

State examiners often review your website to check for disclaimers, false advertisements, inconsistent information, noncompliant financial representations and locations of units during registrations and renewals. Be mindful of the impact information on your website can have on your system from a regulatory standpoint as well as from a franchise sales perspective.

Please try to provide this information to Natalie Restivo, Esq. and Adam Wasch Esq. at natalie@thefranchisefirm.com and adam@thefranchisefirm.com as soon as it is available. Contact us any time if you have any questions.