Glossary · People and paperwork
Franchise Disclosure Document(FDD)
In short
A legal document that franchisors must provide to prospective franchisees, outlining detailed information about the franchise system, its history, costs, and obligations. It's essential due diligence for any franchise buyer.
What it means in a deal
If you're buying a franchise, the FDD is your primary source of information. Review it thoroughly to understand fees, training, support, and any restrictions. The SBA requires the FDD and a copy of the Franchise Agreement to approve loans for franchises. Ensure the franchise is listed on the SBA Franchise Directory.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Franchise Disclosure Document
- If a seller note on full standby is repaid prematurely, what are the lender's disclosure obligations to the SBA?
- What is an SBA *loan authorization* document, and why is it important?
- What is the specific SBA policy document that addresses collateral life insurance requirements?
- What information is required to document the purchase price allocation for a business acquisition?
- How does a lender document adherence to prudent lending standards in the underwriting credit memo?
- How does the buyer's responsiveness to document requests affect the SBA 7(a) application timeline?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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