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Not all silence in franchising is bad.

One of the most common — and legitimate — reasons a franchisor may pause communication or franchise sales is FDD re-registration. Unfortunately, this period is often misunderstood by prospective franchisees and those exploring brands and interpreted as trouble, instability, or worse.  Why are they “going dark”?  We had to stop the process – is something wrong?

Let’s clear that up.

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Not All Silence Is a Red Flag

Every franchisor is required to update and re-register their Franchise Disclosure Document (FDD) annually, typically following their fiscal year-end.

During this compliance window, it’s normal for things to slow down or temporarily stop on the development side of the business.

This is what’s actually happening behind the scenes.

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What’s Actually Going On During FDD Re-Registration

Most franchisors must pause franchise sales while their updated FDD is being finalized and approved. During this time:

• Franchise sales pause
• Discovery Days may be delayed
• Development teams go quiet
• No franchise agreements can legally be signed

This isn’t failure or avoidance — it’s responsible compliance.

A franchisor that continues selling during this period is taking on regulatory and legal risk — for themselves and for the prospective franchisee.  They officially do not have an active FDD – the old is out and the new is being approved. 

Selling franchises with an outdated or unapproved FDD can result in:

• Regulatory penalties
• Buyer rescission rights (the ability to unwind the deal)
• Legal exposure for both parties

That’s why a franchisor who pauses sales during renewal is actually doing the right thing, even if it feels inconvenient or uncomfortable from the outside.

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What a Franchisor Updates During FDD Re-Registration

1. Financial Statements (Item 21)

This is the backbone of the update.

• Audited balance sheet
• Income statement
• Cash flow statement

Why it matters:
This tells you whether the franchisor is financially healthy, stable, or under strain. It’s one of the biggest reasons sales must pause until renewal is complete.  And, all prospective franchisees want updated numbers for their evaluation of the system they are inquiring about.  Wouldn’t you want to know what happened last year?  

2. Franchise System Growth & Turnover (Item 20)

Updated counts of:

• New franchise openings
• Closures
• Transfers / resales
• Terminations

Why it matters:
This shows real system momentum (or contraction). Trends here often matter more than headline brand size.  It is important to see sustained growth in the brand with new owners joining and being successful.  Is it ok to see a few close – sure – not all reasons are bad.  Ideally, you want to see growth, increased sales numbers and a healthy system.

3. Litigation & Bankruptcy Updates (Items 3 & 4)

Any new lawsuits, settlements, or bankruptcies involving:

• The franchisor
• Executives
• Parent or affiliate companies

Why it matters:
Prospective franchisees deserve visibility into legal risk before signing.  Do all have a clean slate – no, but it is good to understand what is going on with your support system.

4. Fees & Investment Ranges (Items 5–7)

These sections may be updated to reflect:

• Fee increases or restructuring
• Changes in required vendors or costs
• Revised working capital assumptions

Why it matters:
Inflation, labor costs, real estate, and insurance changes often show up here.  As someone interested in becoming an owner, it is imperative you understand the fees associated with launching and growing a new business.  Your financial preparation is a huge factor in success at launch.  

5. Support, Training, and Operations (Item 11)

Updates may include:

• Changes to training format or duration
• Adjustments to field support
• New technology platforms or systems

Why it matters:
What you’re promised going forward — not what existed two years ago.  Part of being in a franchise system is the frameworks, support and coaching you receive.  You want to ensure you are getting the infrastructure discussed in the evaluation process. 

6. Earnings Disclosures (Item 19), If Provided

If the franchisor offers a Financial Performance Representation:

• Data is refreshed
• Outdated performance groups may be removed
• New averages or medians may appear
  

Why it matters:
This is one of the most scrutinized updates — and one of the most regulated.  Franchisors typically only show operating franchise units in the system that have performed for a full 12 months.  You will want to see an update snapshot of the system – while only averages, these numbers should improve year over year as the franchise grows. 

7.  Agreement & Addendum Changes (Item 22)

Any changes to:

• Franchise agreement language
• Addendums
• State-specific riders

Why it matters:
Even “small” edits can materially affect exit rights, transfer rules, or obligations.

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How to Tell Normal Compliance from Real Trouble

The key difference isn’t silence — it’s communication and continuity.

What Normal FDD Re-Registration Looks Like

• A clear explanation when asked
• A defined (even if flexible) timeline
• Ongoing support for existing franchisees
• Corporate operations continuing as usual

Potential Red Flags to Watch For

• Vague or evasive answers
• Support disappearing for current owners
• No communication or timeline at all
• Leadership exits layered on top of the silence

Silence paired with transparency is normal.
Silence paired with instability is not.

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The “Going Dark” Timeline

The short answer:  anywhere from a few weeks to several months, depending on where the franchisor sells and how much is updated.  Yes, I know – not a clear cut answer.  

Here is why:

States are broken into Non-Registration States, Filing States and Registration States.

Registration States (13) – Approximately 4 – 12 Weeks:

A franchise registration state requires:

• The FDD to be filed, reviewed, and approved by a state regulator
• Updates every year (and sometimes mid-year if changes are material)
• Formal approval before franchise sales can resume

• California*
• Hawaii
• Illinois
• Indiana
• Maryland
• Minnesota
• New York*
• North Dakota
• Rhode Island
• South Dakota
• Virginia
• Washington
• Wisconsin

*the slowest and most detailed reviewers.  Many times the last states for a franchise to register in.  I have seen these take MONTHS!  So a franchise sales developer is not pressuring you to sign prior to going dark – they may just not have a clue when it will be available again.  

Filing States/Notice Requirements (Not Full Registration) – Approximately 2-4 Weeks:

These states don’t “approve” the FDD but still require notice filings or exemptions that are less restrictive but still regulated, such as:

• Michigan
• Texas
• Florida
• Kentucky
• Utah
• Nebraska

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The Bottom Line

The FDD isn’t designed to convince you — it’s designed to protect you and provide you valuable information.  You want the MOST UPDATED possible.

The goal in franchising isn’t to find a business with no risk.
It’s to find one where the risks:

• Match your goals
• Fit your lifestyle
• Align with your tolerance for stress
• Support your long-term exit plan

Understanding the FDD — is how informed buyers make confident decisions.

Ok, that was A LOT of information.  Want to discuss in more detail?  Jump on my calendar and we can debrief.  My goal is not to “sell” you – it is to educate you so you can make the best decision for your future.  Your success in franchising is my success! *I am not a lawyer and will not provide legal advice or representation.  

What It Includes, What to Watch for, and What to Focus On

Buying a franchise isn’t about picking a logo or a brand name (yes, I sound like a broken record) — it’s about understanding risk, responsibility, and fit. The most important document in that process is the Franchise Disclosure Document (FDD).

Yet many buyers:

• Don’t know what the FDD actually contains
• Focus on the wrong sections
• Get overwhelmed!

Let’s break this down clearly and practically.

What Is the Franchise Disclosure Document (FDD)?

The FDD is a legally required disclosure document regulated by the Federal Trade Commission. Its purpose is not to sell you a franchise — it is to disclose risks, obligations, and realities before you sign anything.  When speaking with a franchisor, they must disclose you of this document and there is a mandatory (review) period before you can sign any franchise agreement.  The 14-day rule:  once the franchisor delivers the FDD, typically through DocuSign, the clock starts.  You CANNOT sign the franchise agreement, sign any binding agreements or pay a deposit or initial fee until that time has passed.  Also there is the the 7-day rule: once you receive the final franchise agreement (written for YOU) after the FDD was delivered, you must have at least 7 calendar days to review the final version before signing.  

Who enforces this, you ask?  The Federal Trade Commission.

Every franchisor must present the FDD in the same format, consisting of 23 required sections (“Items”).

The FDD Sections That Matter Most (and Why)

While all 23 items matter, not all deserve equal attention. Here’s how to read the FDD like an informed buyer — not a hopeful one.

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1. Who You’re Partnering With (Items 1–4)

These sections explain:

• The franchisor’s history and structure
• Leadership experience
• Litigation history
• Bankruptcy disclosures
  

What to look for:
Patterns, not perfection. One lawsuit isn’t alarming — repeated disputes, leadership turnover, or unresolved litigation can be.

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2. Your True Financial Commitment (Items 5–7)

This is where many buyers underestimate risk.

• Item 5: Initial franchise fees
• Item 6: Ongoing royalties, marketing fees, technology fees
• Item 7: Estimated total investment range
  

What to look for:

• Is working capital realistic for your lifestyle and household needs?
• What assumptions drive the low vs. high investment range?
• Are vendors required — and who controls pricing?
  

Item 7 is not a guarantee. It’s a starting estimate, not your final cost. Remember the Item 7 is not going to include your first year salary (if you want to pay yourself while starting), manager salary (if you want to start this with leadership in place), etc. These numbers will get your business open, serving customers and some operational capital in the bank.

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3. Control, Territory, and Competition (Items 8–12)

These sections define how much autonomy you truly have.

• Territory protection (or lack of it)
• Supplier requirements and rebates
• Franchisor support and training
• Whether the franchisor can compete with you directly
  

What to look for:

• Vague territory language
• E-commerce or national accounts selling into your area
• Heavy control without corresponding support
  

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4. Lifestyle Expectations and Exit Strategy (Items 15–17)

These items are often skipped — and later regretted.

• Owner participation requirements
• Renewal terms
• Transfer and resale restrictions
• Non-compete clauses
  

What to look for:
If you can’t clearly explain how you exit, you’re not ready to enter.

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5. Performance and System Health (Items 19 & 20)

These two sections should always be reviewed together.

• Item 19: Financial Performance Representations (earnings claims — optional)
• Item 20: Number of franchise openings, closures, and transfers
  

What to look for:

• Are top performers the only ones represented?
• Are closures increasing year over year?
• Do validation calls support what’s shown on paper?
  

Context matters more than averages. All of these numbers need to be validated during the next phase of exploration: VALIDATION. Oh – and more on The ITEM 19

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What Buyers Should Focus on Most

If you’re short on time, prioritize:

1. Item 7 — Capital and cash runway
2. Item 11 — Ongoing support after launch
3. Item 12 — Territory and competition
4. Item 17 — Exit and transfer rights
5. Item 19 — Earnings logic
6. Item 20 — Franchisee turnover and system health
   

Check out more Franchise Disclosure Document Blogs: 

Should I get an Attorney to Review the FDD?

What does “Going Dark” mean?

This is A LOT of information to tackle on your own – when you are ready for a full tour guide on this process (for free) – let’s schedule time: Calendar

The “Day-in-the-Life” Conversation

Your first priority is understanding the reality of the role—not the brochure version. You’re not just buying a brand. You’re buying a job description for yourself for the next 3–10 years. This is the time to understand what is required of the owner to be successful and does this truly FIT your expectations of day to day involvement.

Sample Questions To Ask:

• “What does a typical day look like for you from start to finish?”
• “How much of your time is spent on sales, operations, people management, and admin?”
• “What are the 2–3 tasks you personally can’t delegate right now?”
• “If someone shadowed you for a week, what would surprise them the most?”
  

What you’re listening for:

• Does their day align with how you actually want to spend your time?
• Are they mostly in the field? In the office? Networking? Hiring and coaching?
• Are they doing work that plays to your strengths—or your weaknesses?

If their day sounds like a life you would dread, it’s a sign the model might be fine, but the fit is wrong.

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The Ramp-Up & Learning Curve Conversation

The second conversation is about how hard it really is to get from zero to functioning.

Sample Questions To Ask:

• “How did your first 6–12 months go compared to what you expected?”
• “What were the hardest parts of getting started—licenses, hiring, learning the systems, something else?”
• “How long did it take before you felt confident and not constantly in ‘figure it out’ mode?”
• “If you were starting again, what would you do differently in your first 90 days?”
  

What you’re listening for:

• Are owners consistently saying, “It took longer than I expected”?
• Were there surprises the franchisor should have prepared them for?
• Does the learning curve match your tolerance for discomfort and chaos during that first year?
  

You want honest stories, not just timelines. That’s where the truth lives.

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The Financial Reality (Without Being Awkward) Conversation

Money questions feel delicate, but you can absolutely have them without asking for someone’s P&L.  It is important how you ask questions too.  Remember everyone comes from VERY different backgrounds – keep the questions simple.

Sample Questions To Ask:

• “Did your actual numbers roughly match what you saw in the FDD or were you above/below?”
• “What is your average job ticket price?”
• “What are your big monthly expense items to run the business” 
• “Knowing what you know now, would you have come in with more capital?”
• “Have you been able to pay yourself? If not yet, when do you think you will?”
  

What you’re listening for:

• Are owners consistently under- or over-performing what’s represented?
• Is there a theme around underestimating working capital?
• Are they proud and confident talking about the financial trajectory, or hesitant and vague?
  

You’re not looking for exact dollar amounts. You’re looking for patterns and ranges—and whether this opportunity fits your reality and risk tolerance.  Remember you are in control of making financial decisions for YOUR business.  Get the back of the napkin numbers – job revenue, expenses…boom, you have some margin and then you know your debt.  

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The Franchise Support & Relationship Conversation

A strong brand isn’t just a logo—it’s the support system behind you.

Sample Questions To Ask:

• “How would you describe your relationship with the franchisor?”
• “When you run into an issue, how responsive is the support team?”
• “What kind of help do you realistically get with marketing, operations, and training?”
• “Have you ever felt like the franchisor wasn’t listening? How did they respond?”
• “How much do you engage with other owners?”  “Are they supportive?”

What you’re listening for:

• Is there a culture of partnership or policing?
• Do owners feel heard or brushed off?
• Are they excited about where the brand is going—or worried?

If multiple owners use words like ignored, slow, frustrating, pay attention. Support doesn’t magically get better after you sign.

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The Customers & Lead Generation Conversation

No leads = no revenue, no matter how great the brand looks on paper.

Sample Questions To Ask:

• “Where do most of your customers really come from—corporate marketing, your own networking, referrals, something else?”
• “How effective has the franchisor’s marketing been in your market?”
• “What marketing activities do YOU do that move the needle the most?”
• “Have there been any big shifts in demand or competition since you started?”

What you’re listening for:

• Is the brand marketing engine actually helping—or is it mostly on the owner?
• Are there specific tactics that consistently work across owners?
• Is demand stable, growing, or shrinking in different markets?
  

This is where you separate hype from what actually drives business.  Please note, YOU are responsible for your local marketing.  All owners will complain about lead flow – what are they doing about it from all angles is important to understand. 

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The Challenges, Regrets & “Real Talk” Conversation

This might be the most valuable conversation you’ll have if you ask the right questions and then stop talking.

Sample Questions To Ask:

• “What’s the hardest part of this business that no one prepared you for?”
• “Have you ever seriously considered selling or walking away? What triggered that feeling?”
• “What do you like least about being part of this franchise system?”
• “If someone you loved was considering this brand, what warning would you give them?”
  

What you’re listening for:

• Common pain points: hiring, margins, burnout, competition, support gaps.
• Signs of misalignment between what was sold and what was experienced.
• Whether the challenges are things you can live with—or not.
  

No franchise is perfect. You’re not looking for a brand with no problems. You’re looking at whether the problems are acceptable trade-offs for the opportunity.

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The “Would You Do It Again?” Conversation

This is the ultimate gut-check question.

Sample Questions To Ask:

• “If you could go back in time, would you buy this franchise again?”
• “Would you choose the same brand—or a different industry/model?”
• “Would you pick the same territory or market?”
• “What kind of person do you think truly thrives in this system?”

What you’re listening for:

• Their first reaction—a quick “Yes, 100%” sounds very different from a long pause.
• Subtle hesitations like, “Yes, but…” or “Probably, if…” — those “buts” matter.
• Their description of who thrives—does that sound like you?
  

This is where you often get the most honest, distilled perspective: regrets, gratitude, pride, frustration—all in one.

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How Many Owners Should You Talk To?

As a rule of thumb:

• Average: 3–5 owners
  
• Ideally: A mix of:
  
  • High performers
  • Average performers
  • Newer owners (in first 1–2 years)
  • More mature owners (3+ years in)
    

You want to see the whole spectrum, not just the “highlight reel” you’re introduced to.  And, have a purpose for each call.  If you are trying to talk to everyone to build a case NOT to do it – you are taking the wrong approach. Get your concerns alleviated or proved.  

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Bringing It All Together

Talking to existing franchise owners is not about getting one perfect answer that tells you “yes” or “no.”

It’s about:

• Spotting patterns across multiple conversations
• Checking those patterns against who you are and what you want
• Confirming whether this franchise is the right fit—not just a recognizable logo
  

The Franchise Fit Company is here to help you navigate, explore and ask the right questions.  Book Time:  Calendar