A Key to Discovery: Get the most out of your FDD 

In the current economic climate, more people are looking toward small business ownership, and there’s never been a better time to review your positioning to attract and secure the right franchisees. Brands vie for attention in an ocean teeming with aspiring entrepreneurs while navigating the stringent requirements of compliance and transparency. Yet, in the mix of this competitive dance, a pivotal tool is often overlooked: the Franchise Disclosure Document (FDD).

A comprehensive FDD doesn’t just fulfill legal compliance; it’s an underutilized tool waiting to be transformed into a key part of your discovery process.

An FDD is more than a legal formality. By mastering your FDD, you adhere to federal and state laws and position yourself to leverage crucial sections to showcase your brand’s strengths and transparency during the discovery process.

How can you use your FDD to improve recruitment?

Be transparent.

Good candidates are smart. They can sniff out a nontransparent FDD a mile away. That means an FDD riddled with errors or lacking transparency isn’t just a red flag; it’s a stop sign for potential franchisees.

In contrast, a meticulously crafted and strategically used FDD creates a magnet, helping you pull in ideal candidates and set the stage for a robust onboarding process. With a great FDD, you will have a guide to easily highlight your brand’s success, financial performance representations, and growth opportunities to craft a narrative that resonates.

Essential information

A solid understanding of your recruitment process, including your unique value proposition and ideal candidate, will help you identify key information from the FDD that you will use in your marketing materials and lead generation to attract qualified franchise candidates. This information includes:

• Unit economics. I highly encourage having unit resale information in item 19. This allows candidates to see the equity event and exit value opportunity with a franchise unit in your brand.
• Closures. Do you have closures, and are you properly explaining them in the notes? Some of it may be by design, and this is your chance to explain any shift in business model that existing franchisees weren’t cut out for.
• Your team. There are not a lot of requirements from the Federal Trade Commission on sharing about members of your team, but this is a place to talk strategically about backgrounds and experience.
• Nontraditional opportunities. There are plenty of development models outside the usual channels, and if they represent opportunities for your brand, communicate them in the FDD. Examples include wording in FDD for a conversion, bolt-on, acquire and convert, etc.

Equip your recruiters

Once you have this information in place, it’s a matter of ensuring a smooth and transparent franchise discovery process by training your team to walk candidates through the FDD effectively.

A common mistake brands make is sharing the FDD with candidates to navigate independently. This is a surefire way to lose promising candidates or, worse, move forward with unqualified candidates. Schedule time with your candidates to thoroughly cover your FDD, answer their questions, point out what is important to your brand, and give them the confidence they need in your brand. Using the FDD in the right way is a no-brainer. Results will improve. 

Will you play recruitment as “cards up,” be transparent, and have real, meaningful conversations about your business model? Or will you try to hide, ignore, or shortcut the challenging topics? 

Brands that are transparent and strategic in utilizing the FDD have a better chance of attracting high-quality franchisees. On the other hand, brands that try to hide their weaknesses or avoid discussing important aspects of their business model are at a disadvantage and may struggle to find suitable candidates who align with their values and contribute to their long-term success.

Pull your team together and find out how they are using the FDD throughout the entire process, from lead generation to signing a franchise agreement. You want to know. 

Let’s go to work!

Art Coley is CEO of CGI Franchise. Using the proven Recruitment Operating System (ROS), Art and the ROS Support Team help franchise companies implement and execute a predictable, repeatable, and sustainable franchisee recruitment program. The company is based in Temple, Texas, and works with brands worldwide. Contact Art at 281-658-9409 or acoley@cgifranchise.com.