Initial FDD Questionnaire

Initial FDD Questionnaire

FRANCHISE DISCLOSURE DOCUMENT QUESTIONNAIRE

Welcome to The Franchise Firm LLP. This Questionnaire is designed to gather the information that we will need in order to prepare the Franchise Disclosure Document (or "FDD") for your franchise program in accordance with the Federal Trade Commission's ("FTC") amended Franchise Rule and applicable state law.  While the Questionnaire is lengthy, it is important for you to provide as much relevant and responsive information as possible.  Your completion of the Questionnaire will assist us in preparing your FDD quickly and efficiently.  Please feel free to contact us if you are not sure how to answer a particular question or would like to discuss a particular response in detail.  (The franchising company is referred to in the Questionnaire as the "Franchisor," "you" or “your.”)

ITEM 1

THE FRANCHISOR, AND ANY PARENT, PREDECESSORS, AND AFFILIATES

1. What is the name of the entity that will serve as the Franchisor? What was the state in which the entity was formed? What date was the entity formed?

3. What is the Franchisor’s address and telephone number?

Please include name of parent company, state of formation, and principal business address of the parent company : 

Please include :

Please skip to Question #14. 

ITEM 2

BUSINESS EXPERIENCE

ITEM 3

LITIGATION

ITEM 4

BANKRUPTCY

ITEM 5

INITIAL FEES

Please provide the following :

ITEM 6

OTHER FEES

28. Please disclose, by filling in the chart below, the other recurring or isolated fees or payments made by franchisee and paid to the Franchisor or its affiliates or will be collected by Franchisor or its affiliates on behalf of a third party. Please advise: (i) if the fee is a flat rate, percentage or other calculation; (ii) the amount of the fee; (iii) the date it will be due and collected by Franchisor or its affiliates; and (iv) any additional information you want us to know about the payment (please add any additional fees not included in the chart).

Name of Fee

Amount

Due Date

Remarks

Royalty Fee

Local Advertising Fee

Advertising Fund Fee

Additional Training

Refresher Training

Additional Assistance

Contractor's Fee or other Development Fee

Transfer Fee

Renewal Fee

Audit Fee

Interest

Late Fee

Operations Manual Replacement Cost

Management Fee

Maintenance Fee

Costs and Attorneys' Fees

Indemnification

Relocation Expenses

Further discussion will be done during drafting the FDD.

30. Please complete the following chart on Franchisor’s best estimate of all the expenses expected to be incurred by a typical franchisee as to its initial investment in opening its franchised business. If there are any expenses not included in the chart below that are applicable to opening a franchised business, please add them. If a particular expense is not applicable, please mark "N/A." Please include (i) the estimated amount in a range from low to high; (ii) how franchisee will typically make payment (i.e. lump sum); (iii) when the amount would be due; and (iv) to who franchisee will pay for each item.

Type of Expenditure
Estimated Amount or Estimated LowHigh Range
Method of Payment
When Due
To Whom Payment is to be Made

Initial Franchise Fee

Leasehold Improvements

Furniture, Fixtures and Equipment

Signage

Rent Cost (for 3 months)

Security Deposits

Utility Deposits

Opening Inventory and Supplies

Computer Systems (POS System, computers, etc.)

Insurance Deposits and Premiums (for 3 months)

Business Licenses and Permits

Professional Fees (attorneys, architects, CPAs)

Grand Opening Advertising

Training Expenses (including travel)

Additional Funds (for 3 months)

TOTAL ESTIMATED INITIAL INVESTMENT

Please advise:

ITEM 8

RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

ITEM 10

FINANCING

Please advise :

 

ITEM 11

FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEM AND TRAINING

58. Describe the Franchisor's initial training program for franchisees, including:

ITEM 12

TERRITORY

Note : We will provide in the FDD and franchise agreement that a franchisor can determine the specific territory based on the location of the franchisee and that may vary depending on franchisee’s target area (i.e. a highly dense metropolitan area may have a smaller territory).

ITEM 13

TRADEMARKS

ITEM 14

PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

ITEM 15

OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED BUSINESS

 

ITEM 18

PUBLIC FIGURES

ITEM 19

FINANCIAL PERFORMANCE REPRESENTATIONS

73. Item 19 to the FDD allows a Franchisor to make a "financial performance representation" which is information (whether oral, written or visual or in any other form) given to a prospective franchisee by, on behalf of or at the direction of the franchisor or its agent that states, expressly or by implication, a specific level or range of actual or potential sales, income or profit from franchised or non-franchised units.  Providing this information to potential franchisees is strictly regulated by federal and state franchise law and Item 19 is the only optional disclosure in the FDD.  If the Franchisor has any interest in providing this type of information, please advise us so that we can discuss what is involved in preparing a formal financial performance representation made within the FDD. We will also discuss what can and cannot be done during the sale process given the disclosure made or not made in Item 19. 

ITEM 20

OUTLETS AND FRANCHISEE INFORMATION

ITEM 21

FINANCIAL STATEMENTS

75. The FDD must contain three years of financial statements for the Franchisor prepared in accordance with U.S. GAAP (or as permitted by the Securities Exchange Commission) and audited by a licensed, independent CPA using U.S. GAAS, and presented in tabular form that compares at least two fiscal years. You are allowed to phase in the three years of financial statements and depending on what states you wish to sell in during your first fiscal year, you will either be required to provide an opening balance sheet or audited financial statements.

EXHIBIT A

FRANCHISE MANAGEMENT QUESTIONNAIRE

Each person who is a director, trustee, general partner, officer, or other person who will have management responsibility relating to the sale or the operation of the franchise system by the franchisor (the “Franchisor”) must provide certain information for the Franchisor's franchise disclosure document (“FDD”).  Please be sure to sign the last page as requested to indicate your verification that all answers given in this questionnaire are complete, true and accurate.  

This information should be updated as it changes from time to time and annually for the FDD update.

PLEASE RESPOND TO ALL QUESTIONS COMPLETELY.

I.  HISTORY

B. Business address, telephone number and email address :

II.  LITIGATION, ADMINISTRATIVE ACTIONS AND ARBITRATIONS

 

A. Are you, at the present time :

1. A defendant (or defendant to a counterclaim) in a pending administrative, criminal or civil action against you which alleges:

Note:  For purposes of this questionnaire, an “action” includes a lawsuit, administrative action or an arbitration claim.  A material action is an action that a prospective franchisee would consider important in deciding to do business with the Franchisor.  If you are in doubt whether the action is material, please answer yes and describe the action as required by Paragraph F.(1) below.

B. During the ten (10) year period prior to the date of this questionnaire, have you :

 

3. Been held liable in a civil action, including a lawsuit, administrative action or an arbitration, involving

Note:  For purposes of this question, "held liable" means a finding by final judgment in a judicial, binding arbitration or administrative proceeding. “Held liable” means that as a result of claims or counterclaims, the person must pay money or other consideration, must reduce an indebtedness by the amount of an award, cannot enforce its rights, or must take some action adverse to its interests. Held liable also includes civil, administrative or arbitration actions the person settled where the terms of settlement required the person to pay money or other consideration, forgive or reduce indebtedness, relinquish rights or take any action adverse to its interests. 

 

C. Are you at the present time :

Note:  For purposes of these questions, "currently effective" means an injunctive or restrictive order or decree that has not been vacated or rescinded by a court or by an issuing public agency.

C. If the answer to any of the questions in II.A. through II.E. is yes, please provide the following information :

1. For litigation :

 

2. For orders or decrees:

 

Also include the name, telephone number and address of your counsel :

III.  BANKRUPTCY

A. During the ten (10) year period immediately preceding the date of this questionnaire, have you :

B. If so, describe :