Franchise Disclosure Document Template

Franchise Disclosure Document Sample – Example

The franchise disclosure document is an important document which guides the relationship between the franchisee and the franchisor. Also, prior to the signing of the franchise agreement/contract, the document is made available to the prospective franchisee to study and understand the terms and conditions of the contract. This article provides a franchise disclosure document sample, with details contained therein to act as a guide for interested franchisees.

Table of Contents

  • The Franchisor and Parents, Predecessors and Affiliates
  • Business Experience
  • Litigation
  • Bankruptcy
  • Initial Fees
  • Other Fees
  • Estimated Initial Investment
  • Restrictions on Sources of Products and Services
  • Franchisees Obligations
  • Financing
  • Franchisor’s Assistance, Advertising, Computer Systems and Training
  • Territory
  • Trademarks
  • Patents, Copyrights and Proprietary Information
  • Obligation to Participate in the Actual Operation of the Franchise Business
  • Restriction on What the Franchisee May Sell
  • Renewal, Termination, Transfer and Dispute Resolution
  • Public Figures
  • Financial Performance Representations
  • Outlets and Franchisee Information
  • Financial Statements
  • Contracts
  • Receipts

The Franchisor and Any Parents, Predecessors and Affiliates

Southern Kitchens Inc is referred to in this franchise disclosure document as “Southern Kitchens,” “You” refers to the person or entity buying the franchise from Southern Kitchen which is a restaurant located in Louisiana was founded in 2001under its current name. Southern Kitchens has since expanded its operations into franchising which commenced in 2009. Southern Kitchen currently has no affiliates in any business line.

Since the inception of Southern Kitchens by Mr John Price, the company has never transferred ownership or sold its shares to any individual or group. Thus, It has remained under the sole ownership of the owner.

Business Experience

  • Board Chairman: John Price

Before becoming the chairman has held the position of Chief Executive Officer which he held from 2001 to 2005 since the inception of the company. He has a vast experience in catering and has worked with notable restaurant brands such as McDonalds and KFC.

  • Chief Executive Officer: Graham Wise

Holding this position from 2005 to date, he has been Southern Kitchen’s director of operations and holds a Bachelors degree in business administration, as well as being well experienced in operational management and doubles as a business consultant.

  • Chief Financial Officer: Ted Newton

As Southern Kitchen’s financial officer from 2010, He is a chartered accountant and has worked as an accountant with several financial institutions such as Barclays and Citibank.

Litigation

Currently, there is no litigation for disclosure in the franchise disclosure document.

Bankruptcy

Bankruptcy filings and proceedings are not required for disclosure in this document.

Initial Fees

To own this franchise you must pay an initial franchise fee of $50,000 for a limited service franchise, while a fee of $60,000 applies to the traditional franchise.

Other Fees

NAME OF FEE AMOUNT DATE OF PAYMENT
Audit Fees $13,000 First Friday of every month
Advertising Fees 0.9% of gross earnings Quarterly
Relocation Fees $12,000 After approval
Promotion and Marketing 2% of gross earnings Quarterly
Service charge $200 Monthly

 

Estimated Initial Investment

Expense Estimate Payment Method Due Date
Furniture equipments and fixtures $190,000 to $300,000 As Incurred As incurred
Engineering and Architectural Fees $6,000 to $15,000 As incurred Prior to commencement
Travel, Wage, and Living Expenses (during training) $3,000 to $ 15,000 As incurred Training periods

 

Restrictions on Sources of Products and Services

All food items must be purchased from Southern Kitchen. Only Southern Kitchen’s proprietary products such as seasoning, drinks, as well as spices must be used. You must also adhere to Southern Kitchen’s hygiene and quality standards at all times.

Franchisee’s Obligations

Obligation Article Item
Trainings (Initial and Ongoing) Article 3 of franchise agreement Item 8
Site Selection and Purchase Article 9 and 6 Item 7
Fees Article 12 and 13 Item 4
Proprietary information and trademark Article 7, 8 and 10 Item 5

 

Financing

Currently Southern Kitchen offers no direct or indirect financing for its franchisees.

Franchisor’s Assistance, Advertising, Computer Systems and Training

Southern Kitchen will provide training for both traditional franchisees as well as limited service franchisees that will cover delivery, financial management, kitchen preparation, orientation and kitchen supervision. Other areas of training will include dishwashing, hostess, server and opening and closing manager duties which will round off with a final test and evaluation session.

A list of approved equipment and product suppliers will be provided by Southern Kitchen to all its franchisees. These are tailored to meet certain specifications.

Territory

As a Southern Kitchen franchisee, you are entitled to an exclusive territory covering a one(1) mile radius. However, you cannot relocate from your exclusive territory without an express permission from Southern Kitchen.

Trademarks

As a Southern Kitchen franchisee, you are entitled to use or operate under the name “Southern Kitchen” The use of this trademark may only be used according to the specification given by Southern Kitchen.

Patents, Copyrights and Proprietary Information

All Southern Kitchen’s operating manual must be kept confidential as failure to do so will result in appropriate sanctions. The manual must not be duplicated, reproduced or copied.

Obligation to Participate in the Actual Operation of the Franchise Business

You are under no obligation to operate your Southern Kitchen restaurants. However, you are required to appoint a manager to operate your restaurants. This manager must have successfully completed the stipulated Southern Kitchen training. The training program is a requirement for non operating owners as well as operating owners.

Restrictions on What the Franchisee May Sell

Only products and services which pass Southern Kitchen’s approval test are to be sold. Southern Kitchen also has the right to set the prices of these approved products.

Renewal, Termination, Transfer and Dispute Resolution

The holding tenure for a Southern Kitchen franchise is 10 years for both types of franchise (that is, the traditional franchise and the limited franchise. Southern Kitchen allows you to renew your contract which has tenure of 5 years. You may terminate the franchise agreement if Southern Kitchen fails to fulfil any of its obligations to you.

Transfer of your Southern Kitchen franchise is only possible when Southern Kitchen approves the transfer of such.

Public Figures

Southern Kitchen does not use notable figures to promote its franchise. The same also applies to the management of the franchise.

Financial Performance Representations

Southern Kitchen will not make representations pertaining to the financial performance of a franchisee.

Outlets and Franchisee Information

Type of Outlet Beginning of Year End of Year
Franchised Outlet 30 31
Company Owned 0 0
Total 30 31

 

Financial Statements

Find attached Southern Kitchen’s 3-year audited financial statements.

Contracts

Attached as exhibit a is the franchise agreement, and franchise questionnaire

Receipt

Also Find attached a detachable acknowledgement of receipt document.

This franchise disclosure document sample is highly summarized and made available to act as a guide help you have a better understanding of what the contents of a franchise disclosure document looks like. With the information made available here, you will have a fore-knowledge of the procedure involved in signing a franchise disclosure document.

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