Your franchise disclosure document (FDD) is a helpful legal document that you’ll receive from Signarama in the pre-sale disclosure process.
Contained within are 23 chapters or points—technically called “items” of the franchise disclosure document—that provide you a ton of information on Signarama’s history, training, financials, affiliates, and mutual obligations.
The ultimate purpose of the franchise disclosure document is to help you make an informed decision about whether to ultimately sign a franchise agreement with Signarama.
Federal and state franchising laws require that the franchise disclosure document be organized a certain way and provide particular kinds of information. Still, fully grasping an FDD can be difficult if you’re not a lawyer or well-versed in franchising.
CliffsNotes on Understanding Your FDD
Signarama may first have caught your eye by being ranked number one in its category and shoring up a spot within Entrepreneur‘s Franchise 500’s top 100 franchises going today. Signarama currently has 390 locations in the United States and is set on expanding.
To find out whether you want to be part of that expansion, you’ll need to understand your franchise disclosure document. Know that you can request your FDD, if you haven’t already, once your application is received by Signarama and your application is being reviewed and considered.
The first section, or item, of your franchise disclosure document will discuss Signarama’s background as a company and include a timeline of the company, any affiliates, industry competitors, and rules that might be unique to the signage and promotional products industry.
Sections 2 and 3 will get you up to speed on Signarama’s business background and litigation history. You’ll learn about Signarama’s executives and their experiences with the franchise as well as legal actions undertaken by Signarama and/or its affiliates.
Sections 4 and 5 are about bankruptcy and the initial franchise fee, respectively. Section 4 will tell you whether Signarama’s executives have even filed for bankruptcy or whether any of Signarama’s affiliates or parent companies have done so at any time.
Section 5 tells you about the initial fees associated with opening your first branding and vehicle wrap franchise location with Signarama. You’ll learn the particulars about inventory, equipment, and signs as well as deposits and fees that you can expect to incur.
Sections 6-10 generally concern other financial considerations. Section 6 is entitled “other fees and expenses,” in fact, and it talks about fees or costs collected by Signarama that might go toward training, assistance, and an advertising fund.
Section 7 and 8 are about your initial estimated investment (section 7) and restrictions on sources of products and services. Section 7 is pretty easy to understand; section 8, though, is about acceptable suppliers and affiliates that you can go through.
Sections 9 and 10 are your obligations (section 9, obligations of the franchisee) and financing arrangements. Section 9 broaches contractual obligations expanded on within your franchise agreement and section 10 discusses direct or third-party financing options with Signarama.
Section 11 is the mirror image of section 9 in that section 11 is about the obligations of Signarama, the franchisor. Section 12 and 13 are equally important in that those FDD sections discuss territorial protections and trademarks, respectively.
Sections 14 and 15 are more technical and involve Signarama’s patents, copyrights, and proprietary information (section 14) and your required level of involvement in the day-to-day operations of running a signage and vehicle wrap franchise.
Among the last eight sections of your FDD, arguably the most pivotal for making your decision are sections 19 (financial performance representations) and section 21 (financial statements). These sections will go into depth about everything you need to know about financials and whether it’s a feasible investment for you at this point in time.
Fill out our franchise application and request the FDD to get started on your franchise journey with Signarama.