FRANCHISE LAW
FDD Delivery: The 14-Day Rule and Item 23
A renewed FDD only protects you if you deliver it correctly: at least 14 calendar days before the prospect signs anything or pays any money, with a signed Item 23 receipt on file. A franchisor can run a flawless annual update and still create liability by handing the document over too late or failing to document delivery. The renewal and the delivery are two halves of the same compliance job — the first makes the disclosures accurate, the second makes them count.
The 14-Calendar-Day Rule
Under the FTC Franchise Rule, you must give a prospective franchisee the FDD no fewer than 14 calendar days before they sign any binding agreement or pay any fee to you or an affiliate. The clock is calendar days, not business days, and you do not count the day of delivery. In practice, if a prospect receives the FDD on day one, the earliest they may sign or pay is day 15.
The waiting period exists so prospects have real time to read the document, contact existing franchisees, and consult an advisor. Collecting a deposit, signing a franchise agreement, or even taking a “non-refundable” application fee inside the 14 days is a Rule violation — regardless of how eager the prospect is to move.
Item 23 Receipts
Item 23 is the receipt at the back of the FDD, and it is your proof of delivery. The Rule requires two copies of the receipt page: the prospect keeps one as part of their FDD and signs and dates the other, returning it to you. The signed, dated receipt fixes the start of the 14-day period and is the document you produce to show you disclosed on time.
The receipt also identifies the franchise seller and lists the FDD’s issuance date and exhibits, which is why a renewed FDD needs a current issuance date on its Item 23 pages — circulating a new year’s document with last year’s receipt date is a self-inflicted error.
Why Delivery Records Are Your Defense
If a franchise relationship sours, late or undocumented disclosure is one of the first things a franchisee’s lawyer probes, because it can support a claim for rescission or damages. A clean file — a signed receipt showing the FDD went out at least 14 days before signing — is often the difference between a quick defense and a costly dispute. Keep signed receipts on file; franchisors commonly retain them for several years to demonstrate compliance.
| Delivery slip-up | The fix |
|---|---|
| Signing or taking a fee inside 14 days | Wait until at least day 15 after delivery |
| No signed Item 23 receipt | Collect and file a signed, dated receipt every time |
| Handing out a pre-renewal FDD | Distribute only the current, updated document |
| Last year’s date on the receipt | Update the issuance date at renewal |
A late or improper delivery undoes the protection a careful renewal is supposed to buy — the flip side of the consequences of an improper renewal. For the disclosures that delivery is meant to protect, see what changes in an annual FDD update and the FDD renewal timeline.
Frequently Asked Questions
Is the 14-day period business days or calendar days?
Calendar days. You do not count the delivery day, so the earliest a prospect may sign or pay is the 15th day after they receive the FDD.
What can’t happen during the waiting period?
No binding agreement and no payment — including deposits or application fees — to the franchisor or an affiliate until the 14 days have run.
What is the Item 23 receipt for?
It documents when the prospect received the FDD. The franchisee signs and dates one copy and returns it; that receipt fixes the start of the waiting period and proves timely disclosure.
How long should I keep signed receipts?
Keep them on file to show compliance if a dispute arises. Many franchisors retain signed receipts for several years as a matter of policy.
A renewed FDD and a compliant delivery process work together. Reidel Law Firm sets up disclosure timing and receipt tracking alongside a flat-fee FDD renewal. Explore the Startup Franchising Package → or contact us to make sure your delivery holds up.
