You must update your FDD with the prior year’s data within 120 days of the end of your fiscal year. This means if your fiscal year end is December 31, you must update your FDD by April 30. If you do not complete the updates by this 120-day deadline, then you will be forced to “go dark” because as of May 1, your FDD is considered stale and cannot be used for disclosures.
If you are planning on having a national franchise offering and will therefore be registering in most or all of the registration states, we recommend you change your fiscal year end to something other than December 31. This is because the vast majority of franchisors have a December 31 fiscal year end, and as a result, the registration states receive a huge influx of renewal filings from March to April (and often into May and June) which causes extreme delays and backlogs in providing approvals for these renewal filings. By choosing a fiscal year end from June 30 through October 31 instead, you will be updating your document in the “off-season” and can sidestep those delays in approvals at the states.
Perhaps the most important recommendation we have for you regarding annual FDD updates is START EARLY! The reality is, you are in a race against every other franchisor to update your FDD and file your renewals with the states. We encourage you to start gathering information and thinking about the updates and changes you wish to make to your FDD in the month prior to your fiscal year end. We also recommend appointing one person to lead your effort internally, someone we like to call the “FDD Hero”. Get that person in touch with us and have them take charge of the process as early as possible. This will put you in position to win the renewal season race!