The Fee That Was Not in Your FDD: How Franchisors Add Costs After You Sign

In July 2024, the FTC issued guidance on a problem that has been growing quietly across the franchise industry for years: fees that appear after you sign. Technology fees. Marketing platform fees. Required vendor charges. Training program costs that were not in your original disclosure document.

The FTC has now made its position clear: if a fee was not disclosed before the sale, imposing it after the sale is a problem.

How Undisclosed Fees Actually Work

The typical pattern looks like this. You receive your FDD. Item 5 lists the initial fees. Item 6 lists the ongoing fees. You sign. Six months later, the franchisor updates the operations manual to require a new point-of-sale system at $200 per month. Or they mandate participation in a new digital marketing platform at $500 per month. Or they add a "technology integration fee" that did not exist when you evaluated the opportunity.

None of these appeared in the FDD you signed against.

The franchisor's argument is usually that the franchise agreement gives them the right to update the operations manual. And in many agreements, it does. But the FTC's position is that using the operations manual to introduce material new costs that were not disclosed is a potential violation of the Rule's disclosure requirements.

What the FTC Is Doing About It

The FTC identified undisclosed fee increases as one of the top three issues in its 2024 rulemaking review. The Commission received complaints from franchisees across multiple systems describing fees that were added after the initial disclosure period.

Two specific areas are drawing the most scrutiny. The first is technology mandates: required software, hardware, or platform subscriptions that create new recurring costs. The second is supply chain requirements where the franchisor (or an affiliate) benefits financially from the mandated vendor relationship.

California's new franchise broker disclosure law, taking effect July 2026, is another signal that states are also tightening transparency requirements around the franchise sales process.

What to Look for in Your FDD

Before you sign, read Item 6 line by line. This is the table of recurring fees. Pay attention to rows with ranges instead of fixed amounts, entries that say "currently" (which implies the amount can change), and footnotes that reference the operations manual.

Then read the franchise agreement sections on the operations manual. Look for language that gives the franchisor unilateral authority to add new requirements. If that language exists, ask for a written list of every fee that has been added in the last three years that was not in the original Item 6 table.

If the franchisor will not provide that list, that is your answer.

The Real Cost of a Franchise

Item 7 gives you estimated initial investment. Item 6 gives you recurring fees. But neither captures post-sale fee increases imposed through operations manual updates. The only way to quantify that risk is to talk to current franchisees and ask directly: what are you paying now that was not in the FDD?

Every franchisee listed in Item 20 is a potential source of this information. Call them.

Source: FTC Report on Franchise Rule Rulemaking Review, July 2024. FTC Staff Guidance on Franchisor-Imposed Fees, July 2024. California Franchise Investment Law amendments, effective July 2026.