In Item 3 of the franchise disclosure document [FDD], the franchisor must disclose if it, it’s affiliate who guarantees the franchisor’s performance; an affiliate who has offered or sold franchises in any line of business within the last 10 years, predecessors, parents, and any it’s management have any pending or past administrative, criminal, or material civil action alleging a violation of a franchise, antitrust, or securities law, or alleging fraud, unfair or deceptive practices, Federal, State, or Canadian franchise, securities, antitrust, trade regulation, or trade practice law, or which are material in the context of the number of franchisees and the size, nature, or financial condition of the franchise system or its business operations, or comparable allegations.
Convoluted? Let’s look at the graphic below:
** last 10 years is calculated from the date a held liable or the date the orders became effective
* Affiliates includes affiliates that offered or sold franchises in any line of business within the last 10 years or affiliate who guarantees the franchisor’s performance
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Trademarking and Franchise Law