Source Policy

The FDD is a legally required pre-sale disclosure document that franchisors must provide to prospective buyers at least 14 days before any agreement is signed. FDDs contain 23 standardized Items covering everything from franchisor background and litigation history to financial performance representations and franchisee contact lists. We obtain FDDs from state regulatory databases, the FTC, and commercial FDD repositories. All data drawn from FDDs cites the specific Item number and FDD year.

Fourteen states require franchisors to register their FDD before offering franchises for sale (California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin). These registration filings may contain state-specific amendments, compliance actions, and approval letters that supplement the base FDD. We monitor state databases for registration status, amendments, and enforcement actions.

For publicly traded franchise companies, SEC filings (10-K annual reports, 10-Q quarterly reports, and 8-K current reports) provide audited financial statements, segment-level revenue data, and material event disclosures that often contain more detailed and independently audited financial information than the FDD alone. We use SEC filings to supplement and cross-check FDD financial data for public companies.

We research litigation history through PACER (the federal court records system) and state court databases to identify franchisor-franchisee disputes, class actions, regulatory enforcement actions, and settlements. Litigation context is important: a single resolved dispute is evaluated differently from a pattern of repeated franchisee termination suits. Court records allow us to assess whether FDD Item 3 disclosures are complete.

We collect performance data and satisfaction ratings from current and former franchisees through our verified submission process. Submissions are cross-referenced against Item 20 franchisee lists to confirm ownership. Community data includes actual investment figures, first-year revenue, operating cost breakdowns, support quality ratings, and would-do-it-again assessments. Individual submissions are never published — only aggregated metrics enter brand profiles.