Understanding Franchising: What is an FDD?
March 19, 2019
Before you learn how run a franchise, you need to learn the ins and outs of the franchise opportunity. Here at U.S. Lawns, we want to provide our prospective franchisees with everything they need to know about our commercial lawn care franchise before they sign the franchise agreement and pay the franchise fee. Here’s an inside look at what the franchise disclosure document (FDD) is, and why it is so important to you as an investor and to the brand.
What Is the FDD?
The Franchise Disclosure Document (FDD) became prominent in the 1960’s to help ensure prospects made an informed investment, and had everything there is to know about the brand in one convenient legal document. The FDD is required for all franchises, and it contains 23 standardized items designed to make it easy to compare one franchise opportunity with another. These items outline and break down different things like the brand’s leadership, your role as a franchise owner, what the total investment goes to, and how much money you could make with a franchise. It is important to carefully read through the FDD and understand the different sections so that you know you are investing in the right opportunity for you. Here are some of the key items in the FDD to take a look at when you receive it.
Item 5: The Franchise Fee
After you read the FDD, you will be presented with the franchise agreement, and as part of this, you agree to pay the franchise fee. Our fee is $34,000 and it is due in a single lump sum; however, we do offer some financing options to help new franchisees get started on the process of learning how to run a franchise. Our franchise fee covers the exclusive rights to own and operate a U.S. Lawns location. It will also cover part of your training and initial support to get you started with your new lawn care business.
Item 7: The Initial Investment
Another very important item in the FDD is the initial investment. In this section, you will see what the total investment will look like including the franchise fee, training, support, tools, systems, and equipment. Our initial investment also factors in starting capital for beginning expenses. Our total investment for a new U.S. Lawns franchise owner ranges from $53,500 to $81,300, including the franchise fee. We also offer discounts for landscape business owners looking to convert and honorably discharged veterans.
Item 12: Territory
When you invest in our lawn care franchise opportunity you will get an exclusive territory and marketing rights to service commercial businesses that are in your area. This helps maximize your profit potential because you won’t have any competing U.S. Lawns franchises near you.
We took extra steps to make sure our territories were set up for franchisees’ success. We use CoStar, which is the #1 commercial real estate information company in the US. We run different demographic data through this system several times because we want to make sure there are enough commercial properties in multiple verticals within a specific area with a need for a landscape and lawn care franchise. Our research then determines the U.S. Lawns franchise territories that are available all across the country.
Item 19: Financial Performance Representations
This is an optional item that answers the question “how much money can I make with this franchise?” This item takes the financial performance data of other franchisees and shows how much they have made at different points of their business’ growth. If a brand is trying to hide their profitability, it could mean one of two things: they don’t want you to see how much their franchises make, or they don’t have any franchises to show. Neither exactly help boost confidence. This is why we make sure to include our numbers from top line revenues down to average net profit percentages; we want our franchisees to be sure that this is the opportunity for them, so we provide as much information as we can for them.
The 23 items in the FDD are very important to read and understand. Take the first step to learning how to run a franchise and investing in a lawn treatment franchise by contacting us today.