Franchise Glossary
Item 7
The FDD section that details the estimated initial investment required to open and operate a franchise unit.
Item 7 is one of the most scrutinized sections of the FDD because it provides a comprehensive breakdown of all startup costs. It includes the franchise fee, real estate, construction, equipment, opening inventory, training expenses, insurance, working capital, and any other costs the franchisor estimates. Ranges are provided as low and high estimates. Smart buyers use Item 7 as a starting point and then validate the figures by speaking with existing franchisees during validation calls.
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