---
title: "Compare a capital-expenditure demand with the disclosure and the agreement"
url: "https://ailawframework.com/practice/franchising-and-distribution/assess-a-franchisor-s-capital-expenditure-demand-against-the-disclosure/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A34-E20261018-6-US"
practice_area: "Franchising & Distribution"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Compare a capital-expenditure demand with the disclosure and the agreement

> 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.…

Canonical page: https://ailawframework.com/practice/franchising-and-distribution/assess-a-franchisor-s-capital-expenditure-demand-against-the-disclosure/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Franchising & Distribution](https://ailawframework.com/practice/franchising-and-distribution.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| 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 | United States |
| Applies to | [Assess a franchisor’s capital expenditure demand against the disclosure and the agreement](https://ailawframework.com/practice/franchising-and-distribution/assess-a-franchisor-s-capital-expenditure-demand-against-the-disclosure.md) |

## Checking plan

- What the AI does: 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.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- Do not apply an Australian significant-capital-expenditure test.
- The estimated initial investment in Item 7 is not a promise of later spending.

## Sources

- [16 C.F.R. Part 436, Franchise Rule (eCFR)](https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436) (checked 2026-10-22)
- [FTC Franchise Rule](https://www.ftc.gov/legal-library/browse/rules/franchise-rule) (checked 2026-10-22)

## Forms and precedents for this task

| Form or precedent | Kind | AI level | Summary |
| --- | --- | --- | --- |
| [Significant capital expenditure in a franchise disclosure document](https://ailawframework.com/precedents/franchising-and-distribution/significant-capital-expenditure.md) | Checklist | Yellow | Checklist of the capital expenditure information the ACCC page says must be in the disclosure document for agreements covered by the rules in effect from 1 November 2025. |

Signed-in accounts can read the full text of each one.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*