Franchise Disclosure Documents Explained: How to Read an FDD in Australia, the US and Beyond

A franchise disclosure document is the most useful thing a franchisor will ever hand you, whether you are buying a tutoring franchise or a burger outlet. It is where the brand must put its fees, history, disputes and closures in writing, in a set format, before you commit. It is also long and easy to skim; many buyers read the cost table, glance at the earnings section and sign.

This guide explains what the law requires in the main franchising markets and how to read the document properly: the US Franchise Disclosure Document (FDD) and its 23 items, the franchise disclosure document in Australia under the Franchising Code of Conduct remade in 2025, Canada's provincial laws, and the self-regulated markets of New Zealand, the UK, Singapore and India. We are a tutoring franchisor, so read our view with that in mind; the legal summaries are attributed to regulators and law firms, and they are general information, not legal advice.

For the end-to-end buying process, see our guide to how to buy a franchise. This article goes deep on one step.

What a franchise disclosure document is (and is not)

A disclosure document is a standardised pre-sale briefing. It typically covers who the franchisor is and who runs it; litigation and insolvency; every fee, upfront and ongoing; the estimated cost of opening; required suppliers; territory rights; outlet openings, closures and transfers; renewal, transfer and termination terms; and the franchisor's financial position.

It is not the contract. The franchise agreement is what binds you. Nor is it an endorsement: no regulator in these markets checks the content for accuracy or tells you a franchise is a good investment. Disclosure shifts the burden of judgement to you.

The United States: the FTC Franchise Rule and the 23-item FDD

In the US, the Federal Trade Commission's Franchise Rule requires franchisors to give prospective buyers a Franchise Disclosure Document at least 14 calendar days before they sign a binding agreement or pay any money, according to the FTC's own guidance. Some states add their own registration or disclosure requirements on top of the federal rule.

The FDD always follows the same 23-item structure, which makes brands easy to compare once you know where to look. The items that deserve the most attention:

• Items 1 to 4: who you are dealing with. The franchisor, its executives, litigation (Item 3) and bankruptcy (Item 4). The FTC notes that suits by the franchisor against its own franchisees can point to problems in the system.
• Items 5 and 6: fees. The initial fee, then every ongoing fee, from royalties to technology charges.
• Item 7: estimated initial investment. Low and high estimates for everything needed to open, including an "additional funds" line for the early months. It is an estimate, not a guarantee.
• Items 8 to 16: obligations. Required suppliers, financing, franchisor assistance and training (Item 11), territory (Item 12) and trademarks.
• Item 17: the "what if" table. Renewal, termination, transfer and dispute resolution.
• Item 19: financial performance representations. If a franchisor makes any claim about what franchisees sell or earn, it must be in Item 19, and the FTC says that without one, neither the franchisor nor its sellers may make earnings claims orally or in writing. Including Item 19 is optional.
• Item 20: outlets and franchisee information. Tables of openings, transfers, closures and terminations over three years, plus contact details for current franchisees and recent former franchisees. The FTC describes talking to them as possibly "the most reliable way to get the straight story about the franchisor's claims".
• Item 21: financial statements. Normally three years of audited statements. The FTC recommends an accountant check whether the franchisor earns mainly from royalties or from selling new franchises.

Australia: the franchise disclosure document under the Franchising Code

The Franchising Code of Conduct was remade in 2024 as Chapter 2 of the Competition and Consumer (Industry Codes—Franchising) Regulation 2024, and the new Code generally applies to agreements entered into, renewed, extended or transferred on or after 1 April 2025, according to the Queensland Law Society's Proctor and ACCC guidance. Some obligations had a transition period to 1 November 2025. The Australian Competition and Consumer Commission (ACCC) enforces it. The essentials:

• 14-day disclosure period. The franchisor must give you a disclosure document in the prescribed form, a copy of the franchise agreement in the form it will be signed, and a copy of the Code at least 14 days before you sign or make a non-refundable payment, whichever comes first, as summarised in the ACCC's guidance and by franchise law firms.
• Key facts sheet removed. The previous Code required a short key facts sheet. Law firm summaries of the 2025 changes, including HWL Ebsworth's, report that the requirement has been dropped and franchisors can no longer upload one to the Franchise Disclosure Register. Older guides that mention it predate the new Code.
• Cooling-off period. The ACCC states that a franchisee may terminate a new franchise agreement within 14 days of entering into it. From 1 November 2025, in limited situations, eligible franchisees can opt out of disclosure and cooling-off in writing; think carefully and take advice before ever doing so.
• Significant capital expenditure. The new Code requires franchisors to disclose expected significant capital expenditure, such as refurbishments, in the disclosure document.
• Franchise Disclosure Register. Administered by Treasury, it requires franchisors to answer public questions, including years operating in Australia and start-up costs; uploading the full document is optional, according to law firm summaries. Check it for any brand you are considering.

Our Australian tutoring franchise guide adds local context.

Canada: seven provinces with disclosure laws

Canada has no federal franchise statute. Instead, provinces legislate. With Saskatchewan's Franchise Disclosure Act coming into force on 30 June 2026, seven provinces now have franchise disclosure laws: British Columbia, Alberta, Manitoba, Ontario, New Brunswick, Prince Edward Island and Saskatchewan, according to the Canadian Franchise Association and law firm updates from DLA Piper and MLT Aikins.

The core rule is a disclosure document at least 14 days before you sign or pay any fee, and getting it wrong is serious. Under Saskatchewan's Act, for example, a franchisee who does not receive a compliant document in time may rescind within 60 days of receiving it, extending to two years if no document is ever provided (DLA Piper, 2025). Quebec and the remaining provinces and territories have no franchise-specific disclosure statute, so general contract and civil law apply.

New Zealand, the UK, Singapore and India: no franchise-specific disclosure law

Here you may receive a disclosure document because a franchisor chooses to, or because an industry code requires it of members, not because the law does.

• New Zealand. There is no franchise-specific legislation or mandatory disclosure regime. The Franchise Association of New Zealand (FANZ) requires members to follow its Code of Practice, which law firm summaries report includes a disclosure document at least 14 days before signing and a cooling-off period of at least seven days. Membership is voluntary, and many franchisors are not members. The Fair Trading Act 1986 still prohibits misleading conduct.
• United Kingdom. There is no franchise statute and no statutory pre-contract disclosure. The British Franchise Association's Code of Ethics asks members for "full and accurate written disclosure of all information material to the franchise relationship within a reasonable time prior to the execution of binding documents", according to LegalVision UK. The code binds members only; misrepresentation law gives some protection if earnings claims turn out to be false.
• Singapore. No franchise-specific law and no pre-contract disclosure or registration requirement, according to Pinsent Masons and Bird & Bird. The Franchising and Licensing Association's Code of Ethics promotes disclosure but binds only its members.
• India. No franchise-specific statute or mandatory disclosure document; franchise agreements are governed mainly by the Indian Contract Act 1872 alongside competition, intellectual property, foreign exchange and tax laws, according to law firm guides including Legal 500's India chapter.

Ask every franchisor for a written disclosure document modelled on the Australian or US format. One that already prepares disclosure for a regulated market can adapt it; a refusal tells you something.

How to read a franchise disclosure document: a practical checklist

Set aside a full day and keep a running list of questions. This order front-loads the sections most likely to change your decision.

1. Confirm the dates. Check it is the current version and diarise the 14-day period. Do not be rushed.
2. Read the disputes first. Litigation history, insolvency, and any claims by or against franchisees. Patterns matter more than single cases.
3. Read the outlet tables. Count openings, closures, transfers, terminations and buybacks over three years. Recent clusters deserve an explanation.
4. Build the total cost, not the fee. Take the initial investment estimate, add a more conservative working capital buffer, and model every ongoing fee over the full term. Our guide to tutoring franchise costs compares fee structures.
5. Test any earnings information. Which units are included, what period, revenue or profit? Check it against what franchisees tell you. Our article on whether a tutoring franchise is profitable explains how to interpret these figures.
6. Map the territory. What is protected, and what is carved out: online sales, company outlets or sister brands.
7. Read the exit before the entry. Term, renewal conditions and fees, transfer rules, termination grounds and cure periods, and post-term restraints.
8. Check the franchisor's finances. Ask an accountant whether it could keep supporting you through a downturn.
9. Cross-check against the agreement. Anything said in a brochure or sales conversation that is not in the agreement is not promised.
10. Call the franchisees. Use the contact list to speak with current and former owners, chosen by you, not by the franchisor.

Once you have read the document, our list of 25 questions to ask a tutoring franchisor turns your highlights into a structured conversation.

Red flags in a disclosure document

Each needs a convincing, documented explanation.

• A late, incomplete or rushed document, or pressure to pay a deposit early; the FTC lists this as a warning sign.
• Earnings claims outside the disclosure document, such as slide-deck figures or verbal promises; in the US these are prohibited outside Item 19.
• High turnover, or a former-franchisee list that does not match the outlet tables.
• Franchisee litigation, especially multiple owners raising similar complaints.
• A franchisor that earns mostly from selling new franchises rather than royalties.
• Wide, unexplained cost ranges or a working capital line that looks too thin for the business.
• Vague territory rights, or an "exclusive" area with large carve-outs.
• Unexplained supplier rebates paid to the franchisor.
• Refusal to provide a disclosure document in a market where the law does not require one.

How we approach disclosure at Success Tutoring

Success Tutoring is a K–12 English and Maths tutoring franchise, founded in Sydney in 2017, with retail-style centres run by hands-on franchise partners. What we provide, from launch support to training, is set out in the franchise agreement and disclosure documents, not marketing material. Figures are on our investment schedule and potential earnings pages. Read the documents with your own lawyer and accountant, work through our franchise due diligence checklist, and speak with our franchise partners.

Frequently asked questions

What is a franchise disclosure document?

A standardised document given to prospective franchisees before they sign, covering the franchisor's background, litigation, fees, start-up costs, territory, outlet history, contract terms and finances. In the US it is the FDD; Australia and Canada call it a disclosure document.

How long do I have to review a franchise disclosure document?

In the US, Australia and Canada's seven regulated provinces, you must receive it at least 14 days before signing or paying. Australia also gives a 14-day cooling-off period after you sign.

Does Australia still require a key facts sheet?

No. The Franchising Code remade with effect from 1 April 2025 removed the key facts sheet requirement, according to law firm summaries of the changes. The disclosure document, the franchise agreement and a copy of the Code are still required at least 14 days before you sign.

Is a franchise disclosure document required in the UK?

No. The UK has no franchise-specific legislation. British Franchise Association members are expected to give written disclosure under its Code of Ethics; non-members are not bound. Ask for one anyway.

Should I get a lawyer to review the disclosure document?

Yes. A franchise lawyer can explain restraints and termination terms, and an accountant can test the financial statements and your cost model. The cost is small relative to the commitment.

Next steps

If you are weighing a tutoring franchise, start with our Why us pages to see the support Success Tutoring may offer, then read what the process looks like from first enquiry to receiving disclosure documents and beyond.

This article is general information, not financial or legal advice. Franchise laws change; verify current requirements with the relevant regulator and seek independent legal and accounting advice before signing any franchise agreement.