Beyond the Binder: Item 9

🔎 Understanding Item 9 - Franchisee’s Obligations

Item 9 of the Franchise Disclosure Document (FDD) details what you, the franchisee, will be responsible for after you sign the agreement. This includes a breakdown of legal and operational obligations: site selection, training, hiring, inventory, insurance, software, equipment, and pretty much everything else you’ll be required to do, buy, or maintain during the life of your franchise.

It does not include the financial cost of these obligations (that’s mostly in Item 7) or the contractual fine print (that’s in the franchise agreement), but it’s still where you get a high-level map of your operational responsibilities.

What Must Be Disclosed?

Franchisors are required to disclose, in table format, what the franchisee must do and where that obligation is found; either in the FDD itself or in the franchise agreement. Common obligations include:

• Site selection and lease negotiation

• Purchasing or leasing equipment and supplies

• Hiring and managing employees

• Complying with brand standards and operating procedures

• Purchasing technology systems or using required software

• Reporting requirements and financial disclosures to the franchisor

• Marketing participation, including local advertising and national fund contributions

• Insurance requirements

• Renovation or remodeling duties (in long-term agreements)

The FTC requires the use of a standardized table format so you can compare obligations across different franchisors. Look for headings like “Obligation,” “Section in Agreement,” and “FDD Item.”

Why It Matters

Item 9 is where reality starts to sink in. While Item 7 gives you an estimate of your startup costs, Item 9 spells out the responsibilities behind those costs.

• You may learn that you are responsible for negotiating your lease, hiring contractors, buying furniture, and installing equipment—at your own expense and risk.

• You might be surprised that you're required to purchase technology only from the franchisor or use a specific vendor—even if it's more expensive than alternatives.

• You may find you’re obligated to pay for rebranding or remodeling midway through a 10-year term.

In many cases, Item 9 reveals just how “hands off” the franchisor will be, even as they collect royalties. Franchisors who market a “turnkey” operation often require franchisees to turn all the keys themselves.

Real Due Diligence Tips

Here’s how to dig deeper:

1. Compare the FDD and the Franchise Agreement

The FDD is just a summary. The franchise agreement is where the real language lives. Look up every section cited in Item 9 and make sure you understand what is actually required.

2. Talk to Existing Franchisees

Ask:

• Who handled your lease negotiation?

• Who paid for the POS system installation?

• Were there any “surprise” obligations not mentioned upfront?

Franchisees will tell you what these obligations really look like in practice, and how much they cost. Feel free to reach out to random franchisees, don’t just rely on the list of franchisees that franchise representatives give you.

3. Ask for Examples

If the franchisor claims they assist with training, site selection, or hiring, ask for specific examples and names of franchisees they helped. Then verify with those franchisees whether that support was meaningful.

4. Consult a Franchise Attorney

Have your attorney review the franchise agreement clauses tied to the obligations in Item 9. Ask them: What could go wrong if I fail to meet any of these obligations? The answer may be termination, legal fees, or forced resale.

The Bottom Line

Item 9 may look like a simple table, but it’s your operational roadmap. This is where the myth of “being your own boss” collides with the truth: you’ll be doing a lot of heavy lifting, and the franchisor will likely not be doing it for you.

Item 9 tells you what’s required, but not how much support you’ll get; or how much it will really cost you. That’s what due diligence is for.

Don’t assume that just because something is “standard” it’s fair. Ask questions, talk to franchisees, and remember: every obligation on that list is your responsibility. Miss one, and the consequences could cost you everything.

Stay Tuned: Item 10 - Financing is coming soon.