Definition:
Item 5 in a Franchise Disclosure Document (FDD) lays out the initial fees you’ll need to pay before opening your franchise. These can include the franchise fee, training costs, territory fees, or inventory expenses.
Use It in a Sentence:
Before signing the agreement, Lisa reviewed Item 5 in the Franchise Disclosure Document (FDD) to understand all startup costs for her CoolVu franchise.
Why Is Item 5 Important?
Starting a business takes money, and Item 5 helps you plan for it. This section tells you exactly what fees you’ll pay upfront. No guessing. No hidden surprises.
Most franchises require an initial franchise fee. But you might also need to pay for training, territory rights, or beginning inventory. Item 5 clearly lists each cost, explains when you need to pay it, and whether you can get a refund under certain conditions.
Knowing this helps you budget smarter and avoid early stress. It also shows whether fees are the same for everyone or based on a formula. That can affect how much you’ll owe depending on your situation.
With CoolVu, this transparency makes it easier to move forward with confidence. You know what to expect, and that matters when launching something new.
Related FDD Dictionary Terms:
- Franchise Disclosure Document (FDD) – Legal summary
- Item 1 in FDD: Identifies ownership, location, and business ties.
- Item 2 in FDD: Shows leadership experience behind the brand.
- Item 3 in FDD: Lists legal history and potential risks.
- Item 4 in FDD: Discloses past bankruptcies for review.
- Item 6 in FDD: Lists ongoing fees for operating the franchise.
- Item 7 in FDD: Outlines estimated startup and operating costs.
- Item 8 in FDD: Lists supplier rules and product standards.
- Item 9 in FDD: Lists franchisee duties and responsibilities.
- Item 10 in FDD: Explains franchisor financing and loan options.
- Item 11 in FDD: Lists franchisor training, tools, and support.
- Item 12 in FDD: Explains territory rights and restrictions.
- Item 13 in FDD: Lists trademarks and legal protections.
- Item 14 in FDD: Covers patents, copyrights, proprietary info.
- Item 15 in FDD: Explains owner’s operational role.
- Item 16 in FDD: Lists what franchisees can sell.
- Item 17 in FDD: Renewal, transfer, & ending agreements rules.
- Item 18 in FDD: Shows public figures’ roles and ties.
- Item 19 in FDD: Shows sales numbers and earnings data.
- Item 20 in FDD: Tracks openings, closings, and transfers.
- Item 21 in FDD: Shows audited financial statements.
- Item 22 in FDD: Lists all required franchise contracts.
- Item 23 in FDD: Confirms receipt and starts 14-day wait.
