Disclosure Document

The dictionary defines disclosure as uncovering something revealed. That is the intent of the Federal Trade Commission's Franchise Rule. Franchisors are required by the Federal Trade Commission (FTC) to give out a disclosure document to franchise buyers at least 10 days before buying their franchise.

The disclosure document helps franchise buyers in evaluating the potential of owning a company's particular franchise. The FTC requires a disclosure document in a format that asks a franchisor 23 basic categories of business information. A franchisor is required to answer some, such as previous or pending franchisee litigation and free not to reveal others, such as earnings claims. E.g. How much can a new franchise owner expect to earn on average in their first five years?