The Fine Print: Understanding Franchise Disclosure Documents
Everybody and their mother has a go-to fast food spot. The kind of spot that hits you with an unexpected craving, and an irresistible urge to feast. For me, it’s Taco Bell, but everybody is different. Now has it ever crossed your mind “What if I opened my very own [insert favorite fast food franchise]”? Because you can! There are franchising options from McDonalds to Popeyes to LemonShark Poke. With some serious dough, it’s all you can eat chicken sandwiches for life! But, before you purchase (or maybe you already have), you’re going to learn about one of these documents called a Franchise Disclosure Document (FDD). They are full of terms and conditions, rules and regulations that dictate the who, what, where, when and how of opening a franchise. Full disclosure: as a tech support team for restaurants with vibrant and diverse culinary styles, we do not pretend to be legal counsel on the matter. With that being said, let’s dive into some of the items our Scientists want you to know about.
1. What’s covered by the parent company (and what’s not)
When purchasing a franchise, the primary course of action is to obtain the property and rights to operate said franchise. What do you need to know about next steps? Truthfully, a lot of stuff. In the FDD, you will find that your corporate sponsor has rules that apply to almost every aspect of operations. Even if the franchisor requires you to use them for things like kitchen appliance repairs or utilities, that still could very well become a cost that you must incur. The answer to these questions tends to occur in the first 20 pages of the document, between “Items 4 and Items 13”.
For example – tech support is not always included by the franchisor. Sometimes your franchisor will make you pay for their corporate tech support (more about that later), or they require you to pay for a service that they have chosen. Some franchise owners assume they have to pay for corporate tech support or rely on customer support from their systems company. For example, Science On Call works with a Popeyes franchise as their primary tech support team. It’s a great fit for that organization because Popeyes doesn’t have a corporate IT support team, nor do they have restrictions on whom the Popeyes franchise uses for maintaining their tech stack.
Other services can fall under the same rules including marketing, customer service, internet service provider, and more.
2. Know what you are allowed to do
A common aspect to franchising is that the franchisor wants you to use the products and services with which they’ve already partnered. You will need to know what these are because you can get hit with fines if you don’t comply. Usually these products and services revolve around in-store technology. If the franchisor says you must use NCR for your POS system, you have no choice. It’s important to read the fine print. Within most brands, locations must use a specific POS system. They also have to use hardware such as a Verifone PIN pad, which can often have its own suite of issues. If there is no corporate support, the unfortunate side effect is dealing with multiple different customer service departments for each vendor. Wires can get crossed very easily, and if you’re not a “tech” person, it can get a bit hairy. A natural solution could be hiring an IT person or utilizing a tech support team that specializes in restaurants.
It’s also important to think long-term about your plans for franchising. In the first few paragraphs of an FDD, especially with the big-name brands (McDonald’s, Burger King, Taco Bell etc.), there are different cost analyses for how many units you plan to open. It may get to the point where you can’t just be a one management team. This could mean establishing a fully-functioning LLC that acts as a mid-level corporation. Things can get very nuanced financially and legally as you increase in size, so keep that in mind.
3. Get a second opinion from an experienced professional
It’s always in your best interest to have someone review the document with you. If it’s in your budget, hire a lawyer, and network with other franchise owners who can explain to you what certain items mean. Ask a lot of questions to the franchisor for clarification. These documents are no small feat; FDDs can be upward of 250+ pages. There are many nuanced articles that are chain-dependent, and you’ll want to avoid agreeing to terms that don’t fit your vision. If you love Taco Bell, but their FDD doesn’t work for you, then you probably shouldn’t just go with them for the free Chalupa ( It’s tempting, I know!). A franchise is a big commitment, with many upsides, but you need to know what you’re getting into. Ask for help from experienced pros who have your best interest in mind!
Science On Call does not coordinate partnerships between franchisors and franchisees. Science On Call works with all restaurants as a primary source of technology support.