Fahey Schultz Burzych Rhodes is proud to announce that Mark J. Burzych, current president of the firm and head of its Franchise practice gro...Read More
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Franchise Disclosure Document
Franchise Disclosure Document
Franchisors must comply with both federal regulations and state laws and regulations in connection with the offer and sale of franchises. These laws and regulations require that franchisors provide to prospective franchisees a Franchise Disclosure Document (“FDD”) that outlines specific information about the franchise being offered. The Federal Trade Commission (“FTC”) Rule of Franchising requires that the FDD be provided to prospective franchisees 14 calendar days prior to accepting any fees or signing any contracts.
While the contents of each FDD will vary, the FTC requires every franchisor to disclose 23 specific items, including:
- The Franchisor and Any Parents, Predecessors, and Affiliates. This item provides a description of company background and history and requires the franchisor to disclose corporate information, such as affiliated and parent companies of the franchisor.
- Business Experience. This item offers biographical and professional information of the executive team managing the franchise system.
- Litigation. This item discloses any current or prior litigation involving the franchisor, its parents, predecessors, and affiliates.
- Bankruptcy. This item outlines any current or prior bankruptcy proceedings involving the franchise, its parents, predecessors, and affiliates.
- Initial Fees. This item establishes all upfront fees that a franchisee is obligated to pay to the franchisor prior to opening a franchised business.
- Other Fees. This item provides information on all other recurring fees or payments that may be required to be paid to franchisor.
- Estimated Initial Investment. This item discloses a low to high estimate (includes working capital), giving prospective franchisees an understanding of the expenditures required to establish a franchise.
- Restrictions on Sources of Products and Services. This item covers any established restrictions regarding the source of products or services.
- Franchisee’s Obligations. This item lays out all obligations required of the franchisee under the franchise agreement.
- Financing. This item depicts any terms and conditions of financing arrangements that may be provided by the franchisor.
- Franchisor’s Assistance, Advertising, Computer Systems, and Training. This item explains the assistance that the franchisee can expect to receive from the franchisor.
- Territory. This item must disclose whether the franchisee will be awarded a protected territory to conduct business. If so, it must explain the specific terms of the territory.
- Trademarks. This item lists and provides information on the trademarks, service and trade names that will be licensed to the franchisee.
- Patents, Copyrights, and Proprietary Information. This item provides information on protected information not covered under the trademarks section.
- Obligation to Participate in the Actual Operation of the Franchise Business. This item states the franchisee’s obligation to participate in the operation of the business.
- Restrictions on What the Franchisee May Sell. This item deals with any restrictions on goods and services franchisee offers to its customers.
- Renewal, Termination, Transfer, and Dispute Resolution. This item describes when and whether your franchise can be renewed or terminated and what your rights and restrictions are when you have disagreements with your franchisor.
- Public Figures. This item reveals any person or celebrity who represents the face of the franchise, as well as the amount the individual is compensated.
- Financial Performance Representations. Although not required, this optional item allows the franchisor to provide historical financial performance information or reasonably estimate a franchise’s potential performance.
- Outlets and Franchisee Information. This section provides a status of the franchise system over a 3-year period of company-owned and franchised operations locations and contact information of existing franchises.
- Financial Statements. This item must contain the franchisor’s audited financial statements for the past 3 years, including balance sheets, statements of operations, owner’s equity, and cash flows.
- Contracts. This item lists the agreements that the franchisee will be required to sign, all of which will be attached to the FDD.
- Receipts. In this final item, the franchisor must provide two copies of a receipt to be signed by the prospective franchisee, indicating proper disclosure and delivery of the FDD to the prospective franchisee.
The FDD is a very detailed and complex legal document (often hundreds of pages) that should only be prepared by an expert attorney. Our franchise attorneys specialize in the drafting of clear and concise FDDs that will not only comply with state laws and meet FTC disclosure requirements, but will also make accurate representations of your franchise system. We can help franchisors identify their goals and provide thorough assistance in the preparation of a well-written FDD.
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Whether you are exploring franchising for the first time or operating a well-developed franchise system, our franchise attorneys can answer your questions and advise you on the best course of action.Request a Franchising Consultation
Michael J. Cole
Michael works in FSBR’s business practice, specializing in franchising, intellectual property, liquor licensing, and general business law. He works with businesses of all sizes, offering legal advice regarding business decisions and helping clients manage risk and executive growth strategies through franchising.
Every time a client sells a franchise, Michael shares in their pride. He enjoys the relationships he builds with clients as their trusted legal and business advisor just as much as he likes digging into the details of industry specifics. Applying the nuances of business and franchise law drives his passion for the work he does, and he’s dedicated to helping clients make informed decisions about whatever legal risk or challenge lies in front of them, through every stage of their business growth.
Michael came to FSBR in 2013. Prior to that, he worked on a wide range of corporate, transactional, compliance, and regulatory matters with a Washington, D.C., law firm.
Outside of the office, Michael enjoys spending time with his family, playing golf, and rooting for MSU and Detroit sports teams.
- Goldfish Swim School
- Beyond Juicery + Eatery
- Detroit Wing Company
- Auto-Lab Complete Car care Center
- Ellison Brewery + Spirits
- Mike has presented on topics including liquor licensing, trademarks, copyrights, business formation, real estate taxes, and franchising at seminars and conferences across the state, and he has co-authored articles in franchise publications, including on successor tax and Michigan specific franchise issues.
- Western Michigan Thomas M. Cooley Law School, J.D., 2011, magna cum laude
- Michigan State University, B.A., general business administration, pre-law, 2008
- Commonwealth of Virginia, associate member
- District of Columbia, inactive
- Ingham County Bar Association: Top 5 Under 35
- Super Lawyers: Rising Star for franchise/dealership law
- Best Lawyers: Ones to Watch for Business Organizations (including LLCs and Partnerships)
- Presenter, Michigan Restaurant & Lodging Association, 2021
- Presenter, Michigan Institute of Continuing Legal Education, 2019
- Presenter, Mid-Michigan Small Business Development Center, 2019
John A. Forrest
John focuses on all aspects of representing franchisors and small businesses, including franchise and distribution, commercial contracts, business planning, and corporate law.
He excels at listening to what his clients want to accomplish, analyzing it quickly, and then turning that into the legal documents they need. He’s committed to timely, quality service for his clients, and he’s proud to be part of a team of leading franchise lawyers in Michigan.
A practicing attorney since 1981, John has decades of experience representing and advising established and start-up franchisors in all aspects of franchise, business opportunity, and distribution law, including drafting disclosure documents and registering franchises under state franchise laws for many franchisors. He also has experience in the buying and selling of franchisor companies.
John has worked with a broad range of franchise clients, including Tuffy Tire and Auto Service Centers, Two Men and a Truck International, BIGGBY Coffee, Fowling Warehouse, Massage Green International Franchise Corp., Milkster Nitrogen Creamery, Red Effect Infrared Fitness, Stretch Smart Infrared Therapy, Zoup! Systems, LLC, LOOK! Insurance Agencies, Inc., Tropi-Tan Tanning Salons, Happy’s Pizza, Airtime Trampoline & Game Park, and Wild Bills Tobacco.
When he’s not working, John enjoys downhill skiing, golfing with his wife, having dinner with friends, and spending time with their children and grandchildren.
John came to FSBR in 2018 after serving as a shareholder at Butzel Long in Bloomfield Hills, Michigan.
- Responsible for compliance with federal and state franchise and business opportunity laws.
- Drafting franchise and distribution related documents, including franchise agreements, area development agreements, area representations agreements, subfranchise agreements, co-branding agreements, confidentiality agreements, guaranties, franchise termination agreements, agreements relating to the sale of company-owned stores and the purchase of franchise stores, finance documents, promissory notes, security agreements, form agreements for use by franchisors in all aspects of the franchise business, transfer materials, administrative provisions for operations manuals, documents related to special franchise programs, supplier agreements and settlement agreements.
- Advising franchisors in antitrust, price discrimination, supplier, and other trade regulation issues, as well as to all aspects of franchise dispute resolution.
- Buying and selling of franchisor companies.
- Significant experience in other aspects of commercial transactions and business planning, representing and advising clients on matters relating to corporations, limited liability companies, partnerships, and other entities, buying and selling businesses, business and tax planning, secured transactions, real estate, employment, and estate planning, as well as other areas of commercial law.
John has authored several published works including “Covenants Against Competition in Franchise Agreements” for the second and third editions of the Michigan Chapter of the American Bar Association Forum on Franchising, the Michigan Business Formbook for the ICLE, and several other franchise-related articles.
- University of Detroit School of Law, J.D., 1981, magna cum laude
- Wayne State University Law School, Master of Law, taxation, 1987
- University of Michigan, B.A., history and political science, 1977, high distinction
Mitchell F. Zolton
Mitchell is an associate attorney with Fahey Schultz Burzych Rhodes PLC, where he counsels clients in strategic approaches to achieve their goals. His practice focuses on general business law, franchising, intellectual property, as well as certain aspects of employment law that surround the business sector.
Mitch is dedicated to supporting all aspects of the client’s brand. He routinely conducts trademark clearance searches, prepares and prosecutes trademark applications, and manages the trademark registration process from beginning to end. When negotiating complex licensing and service agreements, he emphasizes communication and collaboration to arrive at a finished product that will not only meet the client’s needs and goals, but also mitigate risks. Mitch also regularly drafts legal memorandums and conducts legal research in his respective fields of practice.
Mitch joined FSBR as a law clerk in 2017 and became an associate with the firm in 2020. While attending law school, Mitch interned at the Legal Services of Eastern Michigan. He was also a member of the Trademark Moot Court Team, a teaching assistant, and served as a notes editor on the Editorial Board of the Michigan State Law Review.
Outside of the office, Mitch enjoys spending time in Northern Michigan at his family cottage on Houghton Lake. He also enjoys craft beer and visiting breweries around the state. As a true Michigan native, he is a loyal fan of the Detroit Lions, no matter the highs and lows that it brings.
- Drafted a license agreement regarding indoor go-karting software. This involved extensive legal research into the issues involved in software licensing.
- Drafted a series of service agreements on behalf of a client.
- Regularly performs research regarding trademark rights and registration and drafts trademark applications, renewals, and responses to office actions with the USPTO for various clients.
- Performed comprehensive legal research and drafted opinion letters and memos for employers regarding FLSA wage and hour issues, including rules relating to handling tips and tip pools.
- Direct Shipping for Michigan Beer? Wine Not, 2020 MSt. L. Rev. 509, (2020)
- Michigan State University College of Law, J.D., 2020, summa cum laude
- Grand Valley State University, B.S., 2016, Legal Studies
- State Bar of Michigan
- Volunteered at the Legal Assistance Center (LAC) located in the Kent County Courthouse in Grand Rapids
Mark J. Burzych
As the leader of the firm’s business practice, Mark is committed to helping clients design and execute their dreams. He focuses on developing and implementing growth strategies for businesses with an emphasis on franchising, liquor licensing and regulation, general corporate matters, mergers, acquisitions, or other corporate transactions, bank debt or equity private placement financing transactions, real estate, and other business-related matters.
The brainstorming, collaboration, and curiosity surrounding what clients seek drive Mark’s passion for his work. He’s proud to become part of his clients’ circle of trusted advisors, engaging with them sometimes daily to guide them through the process of growing their businesses.
His work is specially tailored to the hospitality industry, but his experience allows him to assist virtually any business segment. Mark knows business decisions often have legal implications, and he’s dedicated to ensuring his clients understand the real-world implications of their choices as they pursue expansion strategies. With more than 30 years of experience practicing law, Mark has seen it all in franchising, and he is eager to share his expertise with his clients.
Outside of the office, Mark enjoys spending time with his family, especially on Lake Charlevoix. He’s an avid golfer and a fan of MSU sports.
- Franchisor outside counsel: provide “trusted advisor” counsel to franchisor from start-up to now Top 300 franchise system; perform general counsel services for franchisor; daily advice and counsel regarding franchise sales, relationship management, supply chain contracting, marketing, and operations.
- Franchise Regulatory counsel: provide franchise regulatory counsel to franchisors, from start-up franchisors to iconic brands; perform federal and state law regulatory compliance for franchisors with advice and counsel on franchise sales and relationship management.
- Corporate General Counsel: provide general counsel work to multi-generational closely held business, prepare company for acquisition, representation of company in sale of company to private equity purchaser; assisted closely held company in raising $10 Million in new equity capital private placement with federal and state securities laws compliance.
- Liquor License acquisition (manufacturers and retailers); Liquor law violation hearings; manufacturer-wholesaler relationship management.
- Trademark prosecution and enforcement.
- Co-author, “Recent Developments in Administrative Law,” ICLE State of the Law, 1991
- Author, “Recent State Court Decisions,” Administrative Law Quarterly, Winter 1991, Spring 1992.
- Co-author, “Vive la Difference? Selective Enforcement of Franchise Agreement Terms and System Standards,” Franchise Law Journal, Fall 2003.
- Panel member, “Selective Enforcement of Franchise Agreement Terms and System Standards,” American Bar Association Forum on Franchising annual meeting, 2004.
- Contributing author, “Ask the Experts” column, Michigan Restaurant and Lodging Association’s MRLA magazine.
- Facilitator, “Disclosure Issues Related to Promotional Franchise Sales Incentive Program,” International Franchise Association Annual Convention, 2012.
- Co-author, “Franchisor Successor Tax Liability: Risk in Terminations,” Franchise Law Journal Vol. 35, No. 3, 2016.
- Author, “System Standards and Franchisee Innovation: Striking a Balance,” Franchise Law Journal, Vol. 38, No. 2, 2018.
- Presenter, “Confidentiality Clauses in Franchise Agreements,” American Bar Association Forum on Franchising annual meeting, 2018.
- Author, Michigan chapter of the Franchise Desk Book, third edition, 2019.
- Author, “Franchise Advertising in the Digital Age: Regulators Need to Contemporaneously Address Advancing Advertising Technologies or Step Aside,” Franchise Law Journal, Vol. 40, No. 2, 2020.
- Author, “Using Criminal Background Checks in a Franchise System,” Franchise Law Journal, Vol. 41, No. 3, Winter 2022.
- University of Michigan Law School, J.D., 1990, cum laude
- Michigan State University, James Madison College, B.A., Socioeconomic Policy Problems, 1985
- U.S. District Court, Eastern District of Michigan
- U.S. District Court, Western District of Michigan
- Best Lawyers in America, 2009–present
- Best Lawyers in America’s Lansing Government Relations Practice Lawyer of the Year, 2015
- Super Lawyers, 2009–present
- Leading Lawyers, 2014–present
- Franchise Times Legal Eagles, 2018-present
- Rated AV by Martindale-Hubble
- Member, Michigan Restaurant & Lodging Association Board, 2012–present
- Member, Advisory Rules Committee, Michigan Liquor Control Commission, 2011
- Member, Judicial Crossroads Task Force to the Michigan Bar Association, Business Impact Committee, 2010
- Chair, State Bar of Michigan’s Administrative Law Section, 2009
- Chair, Michigan Public Education Facilities Authority Board, 2002–2010
- Member, Michigan Municipal Bond Authority Board, 1998–2004, 2006, Board Member 2006-2010
- Member, State Bar of Michigan
- Member, Administrative Law Section Council (2007-2016)
- Member, Antitrust, Franchising, & Trade Regulation Section Council (2016-Present)
- Member, International Franchise Association
- Member, American Bar Association
- Member, American Bar Association’s Forum on Franchising
- Member, Catholic Lawyers Guild
- James Madison College Alumni Association Board of Directors
- MSU Alumni Club of Mid-Michigan Board of Directors (1995-1999)
- Michigan State University Alumni Association, Alumni as Resource Committee Member (1999)
- St. Martha’s Council, Knights of Columbus
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At Fahey Schultz Burzych Rhodes PLC, we’ve been helping municipalities, franchised businesses, employers, and more with their legal needs since 2008. We’d love to learn how we can help you, too.