Beyond the Binder: Item 23 - Receipts, Questionnaires, and the Most Dangerous Signature Franchisees Underestimate
If there is one item in the Franchise Disclosure Document that franchisees routinely misunderstand, underestimate, and casually sign without realizing its long-term consequences, it is Item 23.
Item 23 is short. It looks administrative. It feels harmless.
It is anything but.
This is where franchisors ask you to acknowledge receipt of the FDD and, in most systems, to sign a franchisee questionnaire. And this is where one of the most common and costly misconceptions in franchising lives.
Let’s clear it up right now:
I recently spoke with a franchisee in a struggling system and asked a simple question: “When did you sign the franchise agreement?”
“June 15, 2023,” he replied.
But when we pulled the documents, that date told a very different story. June 15 was the day he signed the Item 23 FDD receipt and questionnaire, not the franchise agreement itself. The actual franchise agreement was signed ten days later, a gap that raises its own compliance concerns and deserves separate scrutiny.
This distinction matters. Signing the Item 23 receipt and questionnaire does not mean you have signed the franchise agreement.
Yet thousands of franchisees believe it does. And that misunderstanding alone shapes how casually they treat what they are actually signing.
What Item 23 Is (and What It Is Not)
Item 23 is required by the FTC Franchise Rule. It serves two primary purposes:
To document that the franchisor delivered the FDD to the prospective franchisee
To capture written representations from the franchisee, typically through a questionnaire
That’s it.
It is not:
The franchise agreement
A commitment to buy the franchise
A binding agreement to operate the business
A waiver of your right to negotiate or walk away
You can sign Item 23 and never become a franchisee.
And yet, many franchisors treat the questionnaire as if it is something far more powerful.
The FDD Receipt: A Paper Trail for the Franchisor
The receipt portion of Item 23 exists primarily to protect the franchisor.
It establishes:
The date the FDD was delivered
The version of the FDD delivered
Compliance with the 14-day disclosure requirement
From a legal standpoint, this receipt is evidence. Nothing more.
But from a psychological standpoint, it is often framed as a “milestone,” subtly signaling progress toward ownership. That framing matters, because it encourages premature emotional commitment before real diligence is complete.
The Franchisee Questionnaire: Where the Problems Begin
Most controversy surrounding Item 23 does not stem from the receipt. It stems from the questionnaire.
Franchise questionnaires typically ask prospective franchisees to confirm statements such as:
You were not promised financial results
You did not rely on earnings claims
You conducted your own investigation
No one made representations outside the FDD
You had the opportunity to consult legal and financial advisors
On paper, these sound reasonable.
In practice, they are often anything but.
The History and Controversy of Franchise Questionnaires
Franchise questionnaires became widespread as franchisor litigation increased.
When franchisees sued for misrepresentation, undisclosed earnings claims, or sales misconduct, franchisors needed a defense. The questionnaire became that defense.
Courts have repeatedly been asked to decide whether:
A questionnaire reflects reality
A questionnaire can override oral statements
A questionnaire can negate fraud claims
The answer is not uniform.
Some courts treat questionnaires as evidence. Other courts view them skeptically, especially when:
They are signed late in the process
They contradict documented communications
They are boilerplate and non-negotiable
They are presented as “routine paperwork”
The controversy is simple:
Questionnaires are drafted by franchisors, for franchisors, and used defensively against franchisees.
They are not neutral documents.
The Dangerous Disconnect Between Reality and the Questionnaire
Here’s where franchisees get trapped.
Sales calls happen.
Financial conversations happen.
Earnings examples are shared verbally.
Operational promises are made casually.
Then, at the end of the process, the franchisee is asked to sign a questionnaire stating none of that occurred.
Many franchisees sign anyway.
Why?
They assume it’s standard
They believe it’s required to move forward
They think it’s just acknowledging receipt
They do not want to “rock the boat”
They do not realize that the financial conversations they’ve already had may be illegal under Item 19, especially since most franchisees have only just received the FDD and have no idea what Item 19 permits or prohibits
This is one of the most predictable pressure points in franchising.
Item 23 Is Often Used After a Dispute Begins
In litigation, Item 23 frequently reappears.
Franchisors point to the questionnaire and argue:
The franchisee disclaimed reliance
No earnings claims were made
The franchisee acknowledged risks
The franchisee accepted responsibility
Even when the real-world sales process tells a different story.
That does not mean franchisors always win. It does mean franchisees often start the fight at a disadvantage.
What Else Item 23 Can Include
Item 23 may also include:
Multiple signature pages for spouses or partners
Electronic acknowledgment language
State-specific disclosures
A requirement that the signed receipt be returned before any agreement is issued
Read it carefully.
This is often the first document you sign that later becomes an exhibit.
What Franchisees Should Do Instead
Before signing anything under Item 23:
Read every question carefully
Compare it to your actual experience
Flag anything that is inaccurate
Ask whether changes can be made in writing
Save emails, texts, and call notes
Do not assume “everyone signs this” makes it harmless
And most importantly:
Do not confuse administrative paperwork with commitment.
You are not obligated to move forward simply because you signed an FDD receipt or filled out the questionnaire.
Why This Matters More Than Franchisees Realize
Item 23 is where franchising quietly shifts power.
It is the moment where the franchisor documents your version of events before you fully understand what you are buying.
It is also one of the last moments where you still have leverage, optionality, and the ability to walk away cleanly.
Treat it accordingly.
Final Reality Check
Item 23 is not the franchise agreement. But it is often believed to be.
And that misunderstanding has cost franchisees millions.
Beyond the Binder is about reading what’s there, understanding what’s implied, and recognizing what will be used later. Item 23 deserves far more attention than it gets.
Franchise Reality Check™ makes no representations or warranties regarding the accuracy or completeness of information provided in this post. Nothing contained herein should be construed as legal, financial, or investment advice. Always consult with qualified professionals before making decisions regarding franchise or business opportunities.
