A franchise agreement is a 10- to 20-year legal commitment drafted by the franchisor’s attorneys to protect the franchisor. Your franchise attorney’s job is to make sure you understand every obligation, restriction, and risk before you sign. These 30 questions cover everything from the FDD red flags to the fine print of the non-compete. Check each question off as your attorney addresses it.
30Total Questions
6Categories
$2–5KTypical Review Cost
How to use this tool: Enter the franchise brand and attorney name below. Click any section to expand it. Click any question to check it off as your attorney addresses it during your consultation. Use the notes field under each question to record their response. Your progress saves automatically in your browser.
Why hire a franchise attorney? General business lawyers are not franchise specialists. Franchise law is a niche area with federal regulations (the FTC Franchise Rule) and state-specific franchise relationship laws. A franchise attorney has reviewed hundreds of FDDs and knows exactly which provisions are standard and which are red flags.
Section 01
FDD Review and Red Flags
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Are there any unusual or concerning clauses in this FDD compared to others you have reviewed?
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What does Item 3 (Litigation) tell us about how this franchisor handles disputes with franchisees?
2
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Are the bankruptcy disclosures in Item 4 concerning, and what do they indicate about the franchisor’s financial stability?
3
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What does the Item 20 (Outlets and Franchisee Information) table reveal about the system’s health—closures, transfers, and turnover rates?
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Are there any missing or incomplete disclosures in the FDD that concern you?
5
Section 02
Franchise Agreement Terms
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What is the initial term of the franchise agreement, and what are the conditions for renewal?
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Can the franchisor change the terms of the agreement at renewal? Can they require you to sign a new, different agreement?
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What obligations does the franchisor have to you, and are those obligations enforceable or just aspirational language?
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Can the franchisor unilaterally change the operations manual, fees, or required vendors after you sign?
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Are there any provisions that allow the franchisor to compete with you directly, including through online sales or alternative channels?
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Can I review the operations manual before signing? What restrictions does it impose?
11
Section 03
Financial Obligations and Liability
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What personal guarantee requirements exist, and do they extend to my spouse or other family members?
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What is my total financial exposure if the franchise fails? Am I on the hook for the full remaining term of the lease, equipment contracts, and the franchise agreement?
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Are there any hidden fees, technology fees, or required purchases not clearly outlined in Item 5 and Item 6 of the FDD?
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Does the agreement include an indemnification clause? What am I agreeing to indemnify the franchisor for?
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Can the franchisor audit my books at any time? What are the consequences if they find discrepancies?
16
Section 04
Territory and Non-Compete
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How does the territory clause compare to other franchise agreements you have reviewed? Is it truly exclusive?
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Under what circumstances can the franchisor modify, reduce, or eliminate my territory?
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How do the non-compete restrictions compare to industry norms? Are they enforceable in my state?
19
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What are my obligations after the agreement ends? How long and how far does the post-term non-compete extend?
20
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Does the non-compete prevent me from operating any similar business, or just a competing franchise? Could it affect my future career?
21
Section 05
Termination, Transfer, and Exit
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Under what circumstances can the franchisor terminate my agreement? What cure periods do I have?
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What happens to my investment if the franchise is terminated? Do I get any value back?
23
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What are the transfer restrictions if I want to sell? Does the franchisor have a right of first refusal?
24
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What transfer fees apply, and does the buyer have to meet the same financial requirements and go through the same training?
25
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What happens if I die or become incapacitated? Can my family continue operating or sell the franchise?
26
Section 06
Dispute Resolution and State Laws
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How is dispute resolution handled? Is the arbitration clause fair, or does it heavily favor the franchisor?
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Where would disputes be litigated or arbitrated? Am I required to travel to the franchisor’s home state?
28
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Are there any state-specific franchise registration or relationship laws that give me additional protections beyond the federal FTC Franchise Rule?
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Based on your experience reviewing franchise agreements, what concerns you most about this one? What is the single biggest risk I am taking?
30
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