FDD Teardown: What the Bank Already Knows About the Brand You Are About to Buy

What does your report look like?

One brand, one written report, and the answer is on page one, not buried at the back. Page one is the verdict and the five numbers that decided it. Every page after that shows the work: the franchisor's claim on one side, the federal loan record on the other, and what happens when the two are read together. Your attorney can check each step. So can your lender. Neither has to take our word for it, or the franchisor's. Print it, save it as a PDF, or put it in front of anyone whose opinion you need before you sign.

What does the FDD teardown include?

1. A verdict — proceed, proceed with conditions, or walk — stated on page one, in plain terms, with exactly what would have to be true before you sign.
2. The five numbers that matter — the ones a lender and a franchise attorney look at first, with one line on what each number is and what it means for your money.
3. Blind spots — what the brand's headline default rate hides: in which year of the loan owners fail, which kind of owner, and in which states, each shown as a chart with a one-line finding.
4. SBA default rate vs industry — the brand's charge-off record on federal 7(a) loans, written by the banks that made them, against its industry benchmark, its nearest peers, and how much banks have lent to its owners since 2020.
5. Item 19 deconstruction — which units the franchisor counted, which it left out, and the arithmetic from the gross revenue it advertises to what an owner plausibly takes home.
6. Item 20 unit churn — openings, closures, transfers, and terminations over three years, and whether the system is growing or quietly replacing the owners who left.
7. Item 3 litigation history — what the franchisor was required to disclose, and which of it is worth a question before you sign.
8. Three specific questions to put to the franchisor before signing, chosen from what the record shows, with what a good answer looks like and what an evasive one sounds like.

How does it work?

1. Pick your brand and pay $500Choose the brand below, or start from its brand page, and pay through Stripe. One brand per teardown. A receipt lands by email and the clock starts.
2. See your SBA Record Snapshot instantlyThe confirmation page opens the brand's snapshot: the default rate the banks recorded on its owners, against its industry, the blind spots behind that number as charts, and its nearest peers. Read it tonight. Yours to keep.
3. Full FDD teardown by email within 24 hoursThe verdict, Item 19 read against the bank's ledger, Item 20, Item 3, and three questions for the franchisor, as a self-contained report you can print, save as a PDF, or forward to your attorney and lender. Have the FDD PDF? Reply to your receipt with it.

What does it cost compared with the alternatives?

The teardown pairs with legal review of the franchise agreement; it doesn't replace it. Most buyers use it first, to decide whether the brand deserves the attorney's fee at all, and then to walk into that meeting, and the lender's, already holding the number the bank is going to find. The attorney reads the contract. The lender reads the ledger. The teardown reads both, before either of them bills you. That ledger is not our idea of evidence; it is the regulator's. In 2024, FTC staff published a report on the risks to small business success in franchising. They needed an independent measure of that risk, and they reached for the same SBA loan data. Their words: it "may be a useful resource for borrowers when assessing how to limit potential risks and maximize rewards when deciding whether to purchase a franchise."

Who is this for?

Buyers inside the 14-day disclosure window. If that is you, the FDD on your desk was written by the party that wants your signature, and you are about to put years of work and a six-figure investment behind its numbers. The FTC's own Franchise Rule puts a warning on the cover page of every FDD: "no governmental agency has verified the information contained in this document." You already suspect the Item 19 was written to be read a certain way. What you need is not more suspicion. It is the one record the franchisor did not write, read against the one it did, by someone with no stake in your answer. That is the teardown. It is made to be put in front of a spouse, a partner, an attorney, or a lender, and it is not a substitute for attorney review of the franchise agreement.

The Franchise Disclosure Document arrives 14 days before you can sign. Franchise attorneys charge $1,800–$3,000 for a legal review of the agreement and do not benchmark the brand's SBA loan outcomes. Franchise consultants are paid commissions by franchisors. Nobody else in that room is paid to tell you to walk. Sign on the franchisor's numbers alone and you learn what the bank already knew only after the loan is funded, with your name on it. Read the record first and you either sign without the doubt or walk before the money moves.