The “Plain English” Requirement in FDDs Does Not Stop Legal Jargon

According to the Federal Trade Commission’s (FTC) Franchise Rule, all FDDs must be written in “plain English.”  In theory, this means that the language used throughout the FDD is able to be understood by an average person who may be unfamiliar with franchising. As such, all FDDs should be written using everyday language, short and definite sentences, and without formal or technical language that is often used in legal documents in order to allow prospective franchisees to understand the documents without an attorney to interpret them.

Despite this requirement, FDDs are still allowed to include complicated technical language and legal terms of art.  Such language often includes run-on sentences, passive tense, and multiple negatives that make it difficult for the franchisee to understand the essential information regarding the franchise offering and the franchisor. Because disclosure documents are intended to provide franchisees with information to properly evaluate the business opportunity and risks before entering into any deal, attorneys should strive to ensure that FDDs are written with this purpose in mind.

Having said all this, FDDs inherently include complex information and contractual terms with significant legal consequences.  Before investing in any business, a wise investor should retain a franchise attorney to assist them in understanding the investment.

The contents of this article do not constitute legal advice nor does it create an attorney-client relationship with Canada Lewis & Associates PLLC. You should discuss your situation with an attorney whom you have engaged to perform legal services for you. If you wish to retain the services of Canada Lewis & Associates, please contact our office for more information.

Related Posts