FDD Item 18
Public Figures
FDD Item 18 discloses any compensation paid to public figures (celebrities, athletes, influencers) who appear in promotional materials or endorse the franchise system, along with their level of involvement.
Why It Matters
Item 18 separates real operational involvement from marketing endorsements. A celebrity-named franchise where the celebrity is actually involved in operations is different from one where the celebrity is just a paid spokesperson.
What Item 18 Must Disclose
- Names of any public figures used in promotion or endorsement of the franchise
- Total compensation paid to or for the public figure
- Extent of the public figure's actual involvement in the franchisor's operation
What to Look For
- Public figures with no operational involvement — pure marketing endorsements, value-add is limited
- Brands marketed primarily around a celebrity name — concentration risk if the celebrity disengages
- High compensation to public figures relative to franchisor revenue — costs flow through to franchisees