FDD Item 9 is a cross-reference table that maps every obligation you will have as a franchisee to the specific section of the franchise agreement where that obligation is detailed. It is, in effect, a table of contents for your commitments, covering everything from site selection and training to non-compete clauses and post-termination restrictions. At Lopes Law LLC, we consider Item 9 essential reading because it reveals the full scope of what you are agreeing to for the entire franchise term, which typically spans 10 to 20 years.

This guide walks through each category of obligation in Item 9, explains what the most common provisions mean in practice, and identifies the obligations that most frequently cause problems for franchisees who did not fully understand them before signing.

How Is Item 9 Structured?

Item 9 is required by the FTC Franchise Rule (16 C.F.R. Part 436) and must be presented as a table with two columns. The first column lists the obligation category. The second column identifies the specific section of the franchise agreement (and any related agreements) where the details of that obligation appear.

The FTC requires Item 9 to address a minimum of 23 obligation categories. These categories are standardized across all FDDs, which means you can directly compare the obligations of different franchise systems by placing their Item 9 tables side by side. Here are the categories and what each one means for you.

Site Selection and Acquisition

This obligation covers who is responsible for finding and securing the franchise location. In most systems, the franchisee is responsible for identifying potential sites, subject to the franchisor’s approval. Some franchisors provide site selection assistance, but the final lease or purchase agreement is the franchisee’s responsibility. The franchise agreement typically specifies a deadline by which a site must be secured, and failure to meet that deadline can trigger termination.

Pre-Opening Purchases and Leases

This covers everything you must purchase, lease, or arrange before the franchise opens. This includes construction contracts, equipment purchases, initial inventory, insurance policies, and technology systems. The franchisor may require you to use approved vendors, which can limit your ability to shop for competitive pricing.

Initial and Ongoing Training

The training obligation typically requires the franchisee (and sometimes the general manager) to complete the franchisor’s training program before opening. Training durations range from 1 week for simple service concepts to 12 to 18 months for complex restaurant systems like McDonald’s. Ongoing training requirements may include annual conferences, regional meetings, or online certification programs. All training costs (travel, lodging, meals) are typically the franchisee’s responsibility.

Compliance with Standards and Operations Manual

This is one of the broadest obligations in any franchise agreement. The franchisee must comply with the franchisor’s operations manual, which covers everything from menu offerings and pricing to uniforms, customer service protocols, and facility maintenance. The operations manual is typically not provided until after the franchise agreement is signed, and the franchisor reserves the right to modify it at any time. This means you are agreeing to follow rules that can change without your consent.

Non-Compete Covenants

The non-compete clause restricts you from operating or having an ownership interest in a competing business during the franchise term and for a specified period after the franchise relationship ends. The typical post-termination non-compete lasts 1 to 2 years and applies within a 10- to 25-mile radius of your former franchise location and, in some cases, within the same radius of any other franchise location in the system.

Non-compete enforceability varies significantly by state. California generally does not enforce post-termination non-competes against former franchisees. Other states apply reasonableness tests that consider the duration, geographic scope, and the legitimate business interest the franchisor is protecting. Understanding the enforceability in your state is critical, especially if you are considering franchise opportunities in your existing industry. For more on what to watch for in franchise agreements, see our guide on franchise agreement red flags.

Transfer Restrictions

The transfer provisions govern your ability to sell, assign, or otherwise transfer your franchise. Virtually all franchise agreements require the franchisor’s prior written consent before any transfer. The franchisor typically has a right of first refusal (the right to match any bona fide third-party offer) and imposes conditions on the transferee, including meeting the franchisor’s qualification standards, completing training, paying a transfer fee (typically $5,000 to $25,000), and agreeing to execute the then-current form of franchise agreement.

The transfer provisions directly affect your exit strategy. If the conditions are overly restrictive, selling your franchise becomes difficult or impossible. For a comprehensive discussion, see our guide on franchise transfer and sale.

Personal Participation Requirements

Many franchise agreements require the franchisee to be personally involved in the day-to-day operations of the business. This means the franchisor expects you (not a hired manager) to be present and actively managing the franchise. Some systems allow semi-absentee or executive ownership models, but this must be clearly stated in the franchise agreement. If you are planning to own the franchise as an investment while maintaining your current career, verify that the agreement permits this.

Insurance Requirements

The franchise agreement specifies minimum insurance coverages and limits, typically including general liability, property insurance, workers’ compensation, automobile liability, and umbrella coverage. The franchisor must be named as an additional insured on most policies. Insurance costs vary by state, industry, and location, and they represent an ongoing obligation that begins before opening and continues throughout the franchise term.

Inspections and Audits

The franchisor typically has the right to inspect the franchise premises and audit the franchisee’s financial records at any time, with or without prior notice. Inspection rights allow the franchisor to verify compliance with brand standards, and audit rights allow verification that royalties and other fees are being calculated and paid correctly. While these rights are standard, the frequency and scope of inspections and audits vary between systems.

Renewal Conditions

Item 9 references the renewal provisions, which specify the conditions under which the franchise agreement can be renewed at the end of the initial term. Common renewal conditions include payment of a renewal fee, execution of the then-current form of franchise agreement (which may contain different terms than your original agreement), completion of any required remodel or upgrade, and the franchisee being in good standing with no outstanding defaults. For more detail, see our guide on franchise renewal rights.

A Client Scenario: When the Non-Compete Created an Unexpected Problem

A client approached our firm after receiving an FDD from a commercial cleaning franchise. The client had operated an independent commercial cleaning business for 8 years and was considering converting to a franchise model for the brand recognition, training systems, and lead generation support.

When we reviewed Item 9 and the corresponding franchise agreement sections, we identified a non-compete clause that extended 2 years post-termination within a 25-mile radius of the franchise territory and within 25 miles of any other franchisee’s territory in the system. Given that the franchise system had over 200 locations nationally, the practical effect of this non-compete was that if the client’s franchise relationship ended for any reason, the client would be unable to operate any commercial cleaning business in most major metropolitan areas in the United States for 2 years.

For a client whose entire career and livelihood was built on commercial cleaning, this non-compete represented an existential risk. If the franchise underperformed and the client wanted to exit, the non-compete would prevent a return to independent operations. We negotiated a modified non-compete that limited the restriction to the client’s specific territory and a 10-mile buffer, removing the system-wide restriction. The franchisor agreed to the modification after we demonstrated that the original clause was likely unenforceable in the client’s state due to its overbroad geographic scope.

The Most Commonly Overlooked Obligations in Item 9

Based on our experience reviewing hundreds of FDDs at Lopes Law LLC, these are the obligations that franchisees most frequently overlook or underestimate before signing.

• Mandatory upgrades and remodels: The franchisor can require you to invest significant capital in facility upgrades during the franchise term. These mandates can cost $50,000 to $500,000 or more and are typically non-negotiable.
• Personal guarantee: Most franchise agreements require the individual behind the franchisee entity to personally guarantee all obligations. This means your personal assets are at risk, not just the business entity’s assets.
• Dispute resolution: The franchise agreement typically specifies mandatory arbitration in the franchisor’s home jurisdiction, waiver of jury trial, and limitation on damages. These provisions significantly affect your rights if a dispute arises.
• Record-keeping and reporting: Franchisees must maintain detailed financial records and submit regular reports (weekly, monthly, or quarterly). Failure to comply can constitute a default.
• Indemnification: The franchisee typically agrees to indemnify (hold harmless) the franchisor against all claims arising from the operation of the franchise. This can expose you to significant liability.

At Lopes Law LLC, our $3,000 flat-fee FDD validation review includes a comprehensive analysis of every obligation listed in Item 9, cross-referenced against the actual franchise agreement language. We identify provisions that are unusually restrictive, obligations that may conflict with the franchisee’s business plan, and areas where negotiation may be possible. For more on our process, see what to expect from an FDD review.

Frequently Asked Questions About FDD Item 9

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Last updated: March 13, 2026