---
title: "Check the Item 7 estimated initial investment table"
url: "https://ailawframework.com/practice/franchising-and-distribution/check-that-significant-capital-expenditure-was-disclosed-and-discussed-b/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A34-OB20261022-8-US"
practice_area: "Franchising & Distribution"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Check the Item 7 estimated initial investment table

> Extract the Item 7 table, including each type of expenditure, the amount or range, the method of payment, when it is due, to whom it is paid, the total, and the footnotes on refunds and franchisor financing.…

Canonical page: https://ailawframework.com/practice/franchising-and-distribution/check-that-significant-capital-expenditure-was-disclosed-and-discussed-b/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 the Item 7 table, including each type of expenditure, the amount or range, the method of payment, when it is due, to whom it is paid, the total, and the footnotes on refunds and franchisor financing. Do not build a later capital-expenditure budget. |
| What the lawyer must review | 16 CFR 436.5(g) requires a table titled YOUR ESTIMATED INITIAL INVESTMENT, in capital letters and bold type. The columns are the type of expenditure, the amount, the method of payment, when due, and to whom payment will be made. Pre-opening expenses, where applicable, include the initial franchise fee, training, real property purchased or leased, equipment and related build-out, opening inventory, and deposits, licenses, and other prepaid expenses. Other specific required payments are listed separately and by name. The "Additional funds" category covers other required expenses before operations begin and during the initial period. A reasonable initial period is at least three months or a reasonable period for the industry, and the franchisor describes the factors, basis, and experience used. Unknown amounts use a low-high range from current experience. A footnote states whether each payment is refundable and, if the franchisor or an affiliate finances part of the investment, the amount, down payment, annual interest rate, rate factors, and estimated loan repayments. The total incorporates any ranges. The lawyer checks the table against the quotes and the agreements. Item 7 is the opening investment, including that initial period. ABA Model Rules 1.1 and 5.3 and Formal Opinion 512 leave the review with the lawyer. |
| Written for | United States |
| Applies to | [Check that significant capital expenditure was disclosed and discussed before entry](https://ailawframework.com/practice/franchising-and-distribution/check-that-significant-capital-expenditure-was-disclosed-and-discussed-b.md) |

## Checking plan

- What the AI does: Extract the Item 7 table, including each type of expenditure, the amount or range, the method of payment, when it is due, to whom it is paid, the total, and the footnotes on refunds and franchisor financing. Do not build a later capital-expenditure budget.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- Item 7 is the estimated initial investment, including additional funds for the stated initial period. It is not a disclosure of capital expenditure after that period.
- The operative text describes five columns. Column 5 is the person to whom payment will be made.
- The eCFR page says it is not an official legal edition of the CFR. The May 2008 guide says its advice is not binding on the Commission.

## Sources

- [eCFR, 16 CFR Part 436, Disclosure Requirements and Prohibitions Concerning Franchising](https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436) (checked 2026-10-22)
- [FTC Franchise Rule Compliance Guide (May 2008)](https://www.ftc.gov/system/files/documents/plain-language/bus70-franchise-rule-compliance-guide.pdf) (checked 2026-10-22)

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