Net lease glossary
FDD Item 21 (Financial Statements)
The FDD section containing the franchisor's audited financial statements, typically for the last three fiscal years.
Item 21 of an FDD contains the franchisor's financial statements, generally audited and covering recent fiscal years. It shows the franchisor's revenue, profitability, debt, and liquidity. While a franchisee tenant's lease is not usually guaranteed by the franchisor, a financially weak franchisor can affect the whole system through reduced support, marketing, and brand investment. Investors review Item 21 alongside Items 19 and 20.