Questionnaires, Receipts, and Red Flags: How Franchisors Use Paperwork to Cover Their Tracks

At first glance, franchisee questionnaires and FDD receipts might seem like harmless formalities; a box to check on the way to signing your agreement. But in reality, they are often powerful legal tools used to shield franchisors from accountability when misrepresentations or violations occur during the sales process.

What Are FDD Receipts and Questionnaires?

A Franchise Disclosure Document (FDD) receipt is a simple form that confirms when the franchisor gave you the FDD. This date matters, under the FTC Franchise Rule, you must be given the FDD at least 14 calendar days before you sign the Franchise Agreement or pay any money.

A questionnaire, on the other hand, typically includes a series of statements the franchisee must agree to, often just before signing. These statements can include things like:

• "I received the FDD on [date] and had ample time to review it."

• "I have not received any financial performance representations beyond what is disclosed."

• "I understand all the risks and have consulted legal counsel."

They may be framed as simple confirmations, but they can become legal landmines.

The NASAA Calls It What It Is

In 2022, the North American Securities Administrators Association (NASAA) issued a formal Statement of Policy Regarding the Use of Franchise Questionnaires and Acknowledgments. The document is clear: these forms are routinely abused to insulate franchisors from liability, even when fraud has occurred.

According to NASAA:

• These documents are not the most effective mechanisms for preventing fraud, but are powerful defense tools used by franchisors in court.

• Many questionnaires ask franchisees to waive or disclaim legal protections, in violation of state anti-waiver and anti-fraud provisions.

• Questionnaires and acknowledgments often place the burden of franchise law compliance on the franchisee, rather than the franchisor and its agents; exactly backward from what the law intends.

Some state courts have ruled that disclaimers in questionnaires are unenforceable. But others have not, and franchisors continue to rely on them to dismiss lawsuits before franchisees ever see a courtroom.

How the FDD Receipt Can Be Manipulated

The Franchise Disclosure Document (FDD) receipt is supposed to protect prospective franchisees. It certifies that the franchisor has complied with the FTC’s rule to provide a complete and accurate disclosure at least 14 calendar days before the franchisee signs a binding agreement or pays any money. But in practice, it can be used to do the exact opposite: to create a paper trail that makes it appear that disclosure happened, even if it didn’t.

Let’s walk through two hypothetical examples that show how easily this process can be manipulated:

Example 1: The “Pending Update” Delay

Imagine a prospective franchisee attends Discovery Day. They are excited about the brand and eager to meet key people, tour the flagship store, and ask questions. Before they can do that, they’re asked to fill out a brief form, including a line stating they received the FDD more than 14 days ago.

When the prospect hesitates and says they haven’t actually seen the FDD yet, the franchise salesperson smiles and explains: “The new version is being finalized by our attorney, but it’s only a small update. You’ll get it by email on Monday. Go ahead and mark ‘yes’ so we can move forward with your visit.” The prospect obliges.

The problem? The FDD doesn’t arrive Monday. Or Tuesday. It finally comes weeks later, if at all. But now, the signed receipt suggests disclosure occurred properly and on time. That signed receipt, often stored separately from the actual FDD, becomes part of the franchise file and may later be used in litigation to discredit the franchisee’s claims.

Example 2: The Line-by-Line Coaching

In another scenario, the prospect is handed a questionnaire at Discovery Day. It asks whether they’ve received and reviewed the FDD, and whether anyone made any earnings claims that contradict the FDD’s disclosures.

The franchise salesperson sits with them and says, “Let’s go through this together. This is just a formality.” As each question is read aloud, the salesperson offers guidance: “Just say yes to that. That one too. That just confirms you’ve been given the standard documents.”

The franchisee complies, believing this to be normal and not wanting to appear difficult. But unknown to them, the sales brochure with aggressive earnings projections and glowing unit economics given to them by a sales person the week prior, was not included in the FDD. Verbal confirmations from corporate staff during Discovery Day reinforced those projections. None of that was disclosed, and the FDD itself contained no Item 19 financial performance representation.

Now, with the completed questionnaire on file, the franchisor has a document that appears to certify full and fair disclosure, when in fact the franchisee was misled on both the timing and the content of the representations.

The Bottom Line:

The FDD receipt and questionnaire process can be used to create a false appearance of compliance. It is critical that prospective franchisees understand what they are being asked to sign and why it matters. If the FDD is “on its way,” wait to sign anything. If you are asked to certify that no earnings claims were made, take a beat and ask yourself whether you’ve received any statements, verbal or written, about potential revenue or profits. Even informal conversations and charts in brochures may count.

Do not let pressure or excitement rush you into signing documents you don’t fully understand. The franchisor will keep those documents on file; and later, they may be used to deny that you were ever misled.

Franchise Reality Check™ exists to expose exactly these kinds of tactics and to help you spot them before you sign your name or wire your funds. If you have questions or are unsure whether what you’re being told matches what you’re being given, reach out. The best way to stop franchise fraud is to prevent it from happening in the first place by being an educated and informed franchisee.