US Franchise FDD Item 22: Build a Complete Contract Pack

Turning an existing US business into a franchise involves more than drafting a franchise agreement. Equipment arrangements, premises documents and other contracts can create obligations that are just as important to a prospective franchisee. Building a complete contract pack before launch helps you explain the offer clearly, avoid conflicting promises and establish sound foundations for your franchise community.

Understand what Item 22 requires

The Federal Trade Commission’s Franchise Rule requires a Franchise Disclosure Document (FDD) containing 23 numbered disclosure items. Item 22 requires copies of all proposed agreements relating to the franchise offering to be attached. The franchise agreement is central, but it is not necessarily the whole package.

The FTC identifies leases, options, financing agreements and purchase agreements among the documents covered. Which agreements belong in your pack depends on how your franchise offer is structured.

For an existing business preparing to franchise, the practical question is therefore not simply, “Has our franchise agreement been drafted?” It is, “Have we identified every proposed agreement connected with the offer?”

The federal rule generally requires delivery of the FDD at least 14 calendar days before the prospective franchisee signs a binding agreement with, or pays money to, the franchisor or an affiliate in connection with the proposed sale. There is no federal FDD registration requirement. State franchise registration, disclosure and business opportunity laws may impose additional requirements, so have US franchise counsel check the complete package against the applicable states’ rules.

Map the contracts behind your operating model

Start with the actual arrangements used in your existing outlets. Follow the money, assets and permissions needed to open and operate a location, then identify what changes when an independent franchisee takes responsibility.

Prepare an agreement register with these fields:

• Purpose: what the document allows or requires.
• Parties: which entities sign it, including any affiliate.
• Trigger: when it must be signed and whether it is compulsory or optional.
• Financial obligations: payments, deposits, security and refund conditions.
• Duration: commencement, expiry and any renewal provisions.
• Document owner: who maintains the approved version.

For example, if your company owns equipment and intends to lease it to franchisees, that arrangement needs attention alongside the franchise agreement. If an affiliate will sublet premises or finance purchases, record its role separately rather than treating it as an informal extension of the franchisor.

Include proposed guarantees and other supporting undertakings in the review. Do not assume every independent third-party contract must be attached; ask counsel to determine which documents relate to the offering and belong in Item 22.

Check the pack as one commercial arrangement

Individually sensible contracts can produce an unworkable package when read together. Review them against one shared description of the franchise offer.

Consider a franchise term that extends beyond the proposed equipment lease. What happens when the equipment arrangement expires? Can the franchisee continue operating, and on what terms? Similarly, a premises document may impose a deadline that does not match the opening timetable elsewhere.

Check at least four areas:

• Names and roles: use the correct legal entity consistently and distinguish the franchisor from its affiliates.
• Payments: ensure amounts, calculation methods, due dates and refund conditions match the relevant FDD disclosures.
• Dependencies: identify whether ending one agreement affects another, and have counsel assess the consequences.
• Promises: reconcile contractual commitments with the support your team actually intends to deliver.

This is a commercial review as well as a legal exercise. Finance should verify payment mechanics; operations should test practical obligations; and legal counsel should resolve drafting and enforceability questions.

Do not rely on the operations manual to repair an incomplete contract. Operational instructions should support the agreed arrangement, not conceal additional commercial commitments.

Control versions before issuing documents

Create a single approved master pack rather than allowing separate teams to maintain their own templates. Give each document a version identifier and record which FDD edition includes it.

For each proposed sale, check that the signing documents correspond to the disclosed offering and include any required state-specific provisions. Do not let staff add an equipment arrangement or guarantee at the signing stage simply because it was overlooked earlier.

If negotiations or business decisions change the documents, pause for legal review. Changes can raise disclosure, waiting-period or state filing questions; staff should not decide independently that a revision is too minor to matter.

Finally, retain the issued pack and executed documents together, with a clear record of approved departures from the standard forms. This makes later administration easier and reduces uncertainty about what each franchisee accepted.

Practical takeaway: Before offering your first franchise, build an agreement register, reconcile every proposed contract with the FDD and approve one controlled document pack. A complete offer is easier to explain, assess and administer.