Compare a capital-expenditure demand with the disclosure and the agreement
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- Extract what Items 5, 6, and 7 say about fees and the estimated initial investment, and extract any later capital-expenditure clause in the agreement, each with the page. Write no conclusion that the demand is permitted or forbidden.
- What the lawyer must review
- Item 5 of 16 C.F.R. section 436.5 discloses initial fees, meaning fees and payments for services or goods received from the franchisor or an affiliate before the business opens. Item 6 discloses other fees the franchisee must pay to the franchisor or its affiliates, or that they impose or collect for a third party. Item 7 discloses the franchisee's estimated initial investment. Part 436 as opened does not cap a later capital demand. Section 436.2 requires the disclosure document at least 14 calendar days before the prospective franchisee signs a binding agreement or pays the franchisor or an affiliate. That timing rule is not a test of a later demand. Section 436.10(b) leaves room for a state law that affords equal or greater protection. No state statute was opened.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes extracting and organising information and preparing preliminary structure or wording. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.
Related tasks
Draft or review a franchise disclosure document against the prescribed headingsCheck the franchisor's disclosure and any registration the jurisdiction requiresDraft or review a franchise agreement from the disclosure and the term sheetBuild a franchisee due-diligence issues list from the disclosure pack