New York franchisees—especially those in the process of signing or renewing franchise agreements—should be aware that March and April mark a key time in the franchise calendar: Franchise Disclosure Document (FDD) renewal season.
New stressors may also emerge as we close out Q1 2025. Let’s discuss some FDD basics and why some franchisors may seem to go silent—or push for a signature—during FDD renewal season and how you can strategize.
The FDD and Why It Is Updated
The FDD is designed to help prospective franchisees make informed decisions. It is a federally mandated legal document that provides 23 key disclosures about a franchise system, including information about the franchisor, estimated startup costs, the franchisor’s litigation history, and other essential details.
It is important to note that the FDD is not the same as a franchise agreement. The franchise agreement defines the terms of the relationship between the franchisor and franchisee (based on the FDD); and it is included as an exhibit to the FDD.
Franchisors must update their FDD annually—typically within 120 days after the end of their fiscal year. For many franchisors with a calendar year-end, that deadline is in April.
Timing Matters for NY Franchisees
As previously discussed, franchisors are required by federal and state law to provide prospective franchisees (and renewing franchisees) with an FDD. But if you are in talks with a franchisor in early spring, you might notice a sudden push to sign the contract before the new FDD is ready. It is also possible that communication might stall altogether, as the franchisor prepares its updated filings.
There are a few reasons for this:
- The franchisor may want to close deals under the current FDD before going dark to increase their roster of franchisees. As we say in business and franchising: time kills all deals.
- Updated costs or fees in the new FDD (such as higher estimated startup costs or new supplier requirements) could discourage potential franchisees—so some franchisors prefer to lock in deals beforehand.
- Preparing the updated FDD takes time—and some franchisors pause active negotiations until the new version is finalized and filed.
Franchisors must also include their audited financial statements as part of the updated FDD. Obtaining these audits can take time, which also explains why franchisors go dark; they are often waiting to complete their filing with the state.
What NY Franchisees Can Do During FDD Renewal Season
If a franchisor is urging you to sign quickly, or suddenly goes quiet during this window, don’t panic—but do ask questions. You have the right to request clarification on whether an updated FDD is on the way.
Also, keep in mind:
- You have a legal right to receive the most recent FDD at least 14 days before signing.
- If the FDD you have received is nearing its expiration date, it is okay to wait for the updated version before committing.
Before signing anything, take the time to ask questions and consult a NY franchise lawyer who can walk you through the latest disclosures. An experienced NY franchise lawyer can help you evaluate whether signing quickly—or waiting—is in your best interest.
Visit Lusthaus Law’s FAQ about FDD drafting and renewals.
Contact Lusthaus Law
Lusthaus Law’s website is a resource for New York franchisors and franchisees. We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends, FAQs and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.
