A franchisor has just sent you a PDF. If it’s an indoor-play franchise, it will likely run well past 100 pages. The 2026 filing for Funbox’s own franchise is 167. Federal rules give you 14 days with it before anyone can take your signature or your money.
The good news is that the document tells you where to start, in its first few pages, and that about ten of its 23 sections decide most kids-franchise deals. This guide takes those ten in the order a buyer actually asks about them, using a real kids-franchise filing to show where each answer sits.
The Five-Minute Version
Most FDDs open with a page titled "How to Use This Franchise Disclosure Document." It lists the questions buyers ask and points each one to the part of the document that answers it. It’s the most useful page in the whole filing, and the one most people scroll straight past. The table below builds on it, adding the one thing worth checking in each place.
Your question | Where the FDD answers it | The one thing to check |
|---|---|---|
What will I really spend? | Items 5, 6 and 7 | Which payments are non-refundable, and when each one falls due |
What am I locked into buying? | Items 8 and 16 | What the franchisor earned last year from franchisees’ required purchases |
What support do I get? | Items 9, 10 and 11 | Total training hours, and how many happen at your location |
Where can I operate? | Item 12 | Whether "exclusive" covers every format the franchisor sells |
Do the units make money? | Item 19 | How many units the figures cover, and how long each was open |
Is the system growing or shrinking? | Item 20 | Terminations, transfers, and agreements signed but not yet open |
Who is behind it? | Items 1 to 4 and 21 | Whether the financial statements are audited |
How do I get out? | Items 15, 17 and 22 | What you must sign to renew or to sell |
The rest of this guide takes those eight questions in order.
What an FDD Is, and the 14-Day Clock
A Franchise Disclosure Document (FDD) is the disclosure every franchisor selling in the United States must hand a prospective buyer before a deal. The Federal Trade Commission’s Franchise Rule sets the timing. You must receive it at least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate anything. If the franchisor later changes the agreement’s terms on its own, you get another 7 calendar days with the revised version before you sign.
The document has 23 numbered sections called Items, followed by exhibits. The exhibits carry most of the weight. They include the franchise agreement itself, the franchisor’s financial statements, and a list of current and former franchisees.
One line near the front deserves a second read. Many states require franchisors to register before selling there, and the FDD says plainly that registration "does not mean that the state recommends the franchise." A state filing means the document was submitted. It doesn’t mean anyone checked the numbers inside it.
Two more things to know before you start. The FDD isn’t a contract, and signing the receipt at the back only confirms you got it. And it goes stale. Franchisors must update it within 120 days of the end of each fiscal year, so check the issuance date on the cover and ask whether a newer version is due before you sign anything.
Where to Get Any FDD Free
You don’t have to wait for a franchisor to send one. Four states that require registration publish the filings online at no cost.
California. The Department of Financial Protection and Innovation’s Regulated Entities List. Search the brand or the franchisor’s legal name, filter the results to the Franchises industry, and open the record. Records cover the past ten years, and each filing downloads as a ZIP of its public documents.
Wisconsin. The Department of Financial Institutions’ franchise search takes either a legal or a trade name.
Minnesota. The Department of Commerce’s CARDS franchise search. Enter the franchise name and a year, then set the document type to "Clean FDD" to skip the application paperwork and correspondence filed alongside it.
Indiana. The Securities Division’s registration search. Choose "Franchise" as the registration type, and note that the portal itself says its list isn’t exhaustive.
Each registry only holds franchisors that registered in that state. A brand missing from one may be sitting in another, so check all four before you conclude a filing isn’t public.
Why bother, when franchise-data sites summarize these documents for you? Because summaries age, and they sometimes merge things that should stay separate. At the time of writing, at least one widely read summary gives a single Funbox investment range of $647,000 to $1,630,000. The filing itself shows two formats. The outdoor park runs $647,000 to $855,000 and the indoor park $855,000 to $1,630,000, so the quoted range joins the low end of one to the high end of the other. No single format costs that range.
Funbox’s current filing is on the California registry, and every example below can be checked against it.
Start Before Item 1
Three pages sit in front of Item 1, and they do more work than their length suggests.
How to Use This Franchise Disclosure Document. The question-and-answer page from the table above. Treat it as the table of contents it really is.
What You Need to Know About Franchising Generally. A standard page of warnings that appears in most filings. It covers the realities sales conversations tend to skip. You may owe royalties even while losing money. The franchisor can change its manual in ways that cost you. You may have to buy from suppliers who charge more than the open market. And the franchisor may be able to compete with you inside your own territory.
Special Risks to Consider About This Franchise. Some states require franchisors to list specific risks here, and it’s the closest thing the document has to a warning label. Common entries include a short operating history, a requirement to resolve disputes in the franchisor’s home state, and minimum royalty or advertising payments owed regardless of sales.
Then turn to the back. The state addenda, usually one of the last exhibits, can change terms for residents of particular states. Some cap interest rates, some void clauses that send disputes out of state, and some set conditions on when the franchisor may collect its initial fee.
Check this: read the addendum for your own state before the franchise agreement, because it overrides parts of it.
What It Really Costs (Items 5, 6 and 7)
Item 5 covers everything you pay the franchisor or its affiliates before you open. The franchise fee is the obvious line. In equipment-heavy kids formats, the less obvious one is the play equipment itself, which some filings require you to buy from the franchisor’s affiliate and pay for in full when ordered. Funbox’s filing, for instance, prices its indoor inflatable park at $150,000 to $200,000, due at ordering, on top of a $75,000 franchise fee.
Check this: which Item 5 payments are refundable and under what conditions, and when each falls due relative to signing your lease.
Item 6 is the table of every recurring fee, from royalties and advertising contributions to training, transfers, audits and late charges. Read the table, then read its footnotes, because the definition of "Gross Revenue" usually lives there. That definition decides what every royalty percentage is charged on. Look at whether it includes party deposits, arcade play, food and merchandise, how it treats refunds and chargebacks, and whether it’s calculated on what customers actually paid or on list price. Two filings with the same royalty rate can take very different amounts once their definitions differ.
Two more lines matter in a kids venue. Local advertising requirements are often a floor, set as the greater of a fixed monthly amount or a percentage of revenue. And look for any refurbishment or remodel clause, including whether the filing puts a limit on what you can be required to spend.
Item 7 is the full startup budget in one table, covering the franchise fee, build-out, equipment, signage, inventory, insurance and working capital for the first few months. Read it by its columns, not just its total. "To whom payment is to be made" shows how much flows to the franchisor and its affiliates rather than to landlords and contractors. "When due" shows how much you commit before you know the site will open. For the numbers side by side, see a format-by-format comparison of kids-franchise investment ranges.
Check this: find the "additional funds" line in Item 7, which covers working capital for an opening period the filing has to name. Ask current franchisees whether that period matched how long their own ramp-up actually took.
What You’re Tied To (Items 8 and 16)
Item 8 lists what you must buy from the franchisor, its affiliates or the suppliers it approves, and on what terms. In a kids venue the list tends to be long, running from play equipment and branded grip socks to party supplies, wristbands, uniforms and point-of-sale software. Being required to buy from a single source isn’t unusual in franchising. What matters is the price and the franchisor’s cut.
The rule helps here. Item 8 must disclose whether the franchisor earns revenue from franchisees’ required purchases, and how much it took in from them in its last fiscal year, both as a dollar figure and as a share of its total revenue.
Check this: find that dollar figure, divide it by the number of open units in Item 20, and compare the result with the supplies line in your own operating estimate.
Equipment-heavy formats add a second question, which is how long the equipment is allowed to last. Some franchise agreements set a usable life for play structures and require replacement on a schedule. That cost won’t appear in Item 7, because Item 7 only covers opening. Search the franchise agreement for "replace," "usable life" and "refurbish" as well as reading Item 8.
Item 8 also has to explain how you can get a different supplier approved. Note how long the franchisor gives itself to decide and whether you pay for the evaluation, because that process is your only route to a better price later.
Item 8 is also where insurance requirements usually sit, including any requirement to name the franchisor and its affiliates as additional insureds on your policies. Get a quote against those exact limits before you sign rather than after.
Item 16 is short and matters more than it looks. It lists restrictions on what you may sell, and in a kids venue that governs party packages, food and drink, arcade games and merchandise. Read it alongside your own revenue plan.
What You Get (Items 9, 10 and 11)
Item 9 is a cross-reference table of your obligations, each tied to a section of the franchise agreement. It’s dull and useful, the closest thing the document has to an index.
Item 10 covers financing. Many franchisors offer none, and the filing will say so plainly. If one does, the terms have to be laid out here, including what happens if you default.
Item 11 is where the support promised in sales conversations becomes specific, or doesn’t. It lists what the franchisor does before you open, such as site approval, lease review and design specifications, and what it does afterward. It includes a training table with hours by subject, whether each hour is classroom or on-the-job, and where it happens. It also gives the typical time from signing to opening, and whether there’s a deadline to open after which the franchisor can end the agreement.
Check this: add up the training hours and note how many are delivered at your location rather than online or by phone. Then ask current franchisees whether it was enough to run a sold-out day of parties.
Where You Can Operate (Item 12)
Item 12 defines your territory and, just as importantly, what the franchisor keeps the right to do inside it.
Territories are drawn in different ways. Some filings use a radius, some a list of zip codes, some a population count, and kids filings sometimes count children specifically. Funbox’s, for example, sizes each territory around roughly 50,000 children aged 0 to 14. That’s a useful yardstick even when you’re reading another brand’s filing, because it tells you the market a single unit is expected to draw from.
Then read what "exclusive" leaves out. Item 12 must say whether the franchisor or its affiliates may open other outlets, sell through other channels, or run other brands near you. Exclusivity can also apply to one format while the franchisor keeps the right to place a different format nearby.
Item 12 must also say whether keeping your exclusivity depends on hitting a sales volume or some other target. If it does, find out what happens when you miss it, because some agreements let the franchisor shrink the territory or remove the protection altogether.
Check this: ask for the territory map before signing, and check it against where your families actually live, not just where the site is.
Whether It Works (Items 19 and 20)
Item 19 is the only place a franchisor may tell you what its units earn, and including it is optional. If a filing has no Item 19, the FTC’s position is that the franchisor, and anyone selling the franchise for it, may not make financial performance claims at all, spoken or written. Figures offered in a sales meeting that aren’t in Item 19 are a reason to ask why they aren’t in the document.
When Item 19 is present, read its basis before its numbers. How many units does it cover, out of how many open? How long was each open during the period? Are the figures gross sales or something closer to profit, and which costs are left out? Were they audited? One strong park reported alongside several that opened mid-year tells a different story from a full year of mature units. For a worked read of a real kids-franchise Item 19, see the Trampoline Park vs Inflatable Park Franchise comparison. A separate guide to what Item 19 can and cannot show covers the rules in more depth.
Item 20 is the system’s track record in five tables. The first summarizes outlets at the start and end of each of the last three years. The second lists transfers from one franchisee to another. The third shows the status of franchised outlets by state, including openings, terminations, non-renewals and outlets that stopped operating. The fourth does the same for company-owned outlets. The fifth lists agreements signed but not yet open, and projected openings for the coming year.
Read the third and fifth closest. Terminations and outlets that "ceased operations" are the system’s exits. A large number of signed but unopened agreements can mean a healthy pipeline, or a queue of buyers still waiting on sites and build-outs.
Item 20 also points to the most valuable research asset in the whole document, the exhibit listing every current franchisee with contact details and every franchisee who left in the last fiscal year. It must say, too, whether any franchisees signed confidentiality clauses that limit what they can tell you. The questions worth asking those owners are in the due-diligence checklist.
Who Stands Behind It (Items 1 to 4 and 21)
Item 1 describes the franchisor, its parent and affiliates, and the market. It also has to cover laws specific to the industry, and for indoor play that part is worth reading slowly. Many states regulate inflatable devices and amusement rides, require permits and inspections, and in some cases set ratios between supervising staff and children. Funbox’s Item 1, for instance, flags state rules on supervisory staffing ratios and amusement-ride regulation. Rules like these shape your labor model before a single ticket is sold.
Item 2 lists the management team’s experience over the last five years. Item 3 discloses material litigation and Item 4 bankruptcies, for the franchisor and its key people.
Item 21 attaches the franchisor’s financial statements, usually audited, sometimes with an unaudited interim period added. You don’t need to be an accountant to ask the right questions. Is there an audit opinion, and is it clean? How much cash does the franchisor hold against the support it has promised? Does its revenue lean more on selling new franchises than on royalties from open ones?
Then cross-check the front and back of the document. If a state has concerns about a franchisor’s finances, it can require a warning on the Special Risks page or impose conditions in its addendum, such as deferring the initial fee until the franchisor has met its pre-opening obligations. Either one belongs in front of your accountant.
How It Ends (Items 15, 17 and 22)
Item 15 says whether you must run the business yourself or can hire a manager, which decides whether you’re buying a job or an investment.
Item 17 is a long table covering the life of the agreement. It sets out the initial term and renewal rights, what you must do to renew, when the franchisor can terminate and whether you can, what a transfer costs, the non-compete that follows you after you leave, and the state where disputes are heard. Two lines deserve extra time. The first is what you must sign to renew or to sell. Many filings include a sample general release, which means giving up claims against the franchisor as a condition of either. The second is the post-term non-compete, which can bar you from running a similar business in the area for years after the franchise ends. Look at how transfer fees are set as well. A flat fee and a percentage of the sale price can mean very different costs once the business has grown.
Item 22 lists every contract you’ll be asked to sign, and the franchise agreement is the one that governs. In plain terms, a franchise agreement sets the term and territory, every fee and how it’s calculated, the standards you must meet and how they can change, what you must buy and from whom, reporting and audit rights, insurance, renewal, transfer and termination, and what happens to the site and the brand when it ends. The FDD summarizes it. The agreement is what you’re bound by, so read it in full.
All 23 Items at a Glance
For reference, every Item the Franchise Rule requires, with one line on what it covers and where this guide discusses it.
Item | Official heading | What it tells you | Covered in |
|---|---|---|---|
1 | The franchisor, and any parents, predecessors and affiliates | Who you’re dealing with, plus industry-specific laws | Who Stands Behind It |
2 | Business experience | Management’s last five years | Who Stands Behind It |
3 | Litigation | Material lawsuits | Who Stands Behind It |
4 | Bankruptcy | Bankruptcies of the franchisor and key people | Who Stands Behind It |
5 | Initial fees | Payments before opening | What It Really Costs |
6 | Other fees | Every recurring fee | What It Really Costs |
7 | Estimated initial investment | The full startup budget | What It Really Costs |
8 | Restrictions on sources of products and services | Required suppliers and the franchisor’s revenue from them | What You’re Tied To |
9 | Franchisee’s obligations | An index of your duties | What You Get |
10 | Financing | Any financing offered | What You Get |
11 | Franchisor’s assistance, advertising, computer systems and training | Support, training and time to open | What You Get |
12 | Territory | Your area and its limits | Where You Can Operate |
13 | Trademarks | Whether the brand’s marks are registered, and any disputes | This table only |
14 | Patents, copyrights and proprietary information | The manual and other protected material | This table only |
15 | Obligation to participate in the actual operation of the franchise business | Whether you must run it personally | How It Ends |
16 | Restrictions on what the franchisee may sell | Limits on products and services | What You’re Tied To |
17 | Renewal, termination, transfer and dispute resolution | How the relationship ends | How It Ends |
18 | Public figures | Any celebrity endorsement and the celebrity’s stake | This table only |
19 | Financial performance representations | Earnings figures, if any | Whether It Works |
20 | Outlets and franchisee information | Growth, exits and the franchisee list | Whether It Works |
21 | Financial statements | The franchisor’s own finances | Who Stands Behind It |
22 | Contracts | Every agreement you’ll sign | How It Ends |
23 | Receipts | Your signed receipt, which records when the 14-day clock started | This table only |
Your Next Three Moves
Reading the document is step one. Three more steps turn it into a decision.
Work the checklist. The due-diligence checklist turns each Item above into questions and a worksheet you can fill in brand by brand.
Call the franchisees. Use the exhibit list from Item 20, and call former owners as well as current ones. The FTC’s own Consumer’s Guide to Buying a Franchise calls these conversations possibly the most reliable way to check a franchisor’s claims.
Bring in two professionals. A franchise attorney for the agreement, and an accountant for Item 21 and the Item 7 budget. The FDD itself tells you to consult them.
If indoor play is on your shortlist, ask the Funbox franchise team for our current FDD and read it alongside this guide.
Read it once for the shape. Read it again for the numbers. Then call the owners.
Frequently Asked Questions
What is an FDD in franchising?
It’s the disclosure document every franchisor selling in the United States must give you at least 14 calendar days before you sign or pay anything. It has 23 required Items covering fees, investment, obligations, territory, system history and the franchisor’s finances, plus exhibits that include the franchise agreement.
How long do I have to review an FDD?
At least 14 calendar days before you sign a binding agreement or pay the franchisor or an affiliate. If the franchisor changes the agreement’s terms on its own, you get 7 more calendar days with the revised version. Nothing stops you from taking longer.
Where can I find an FDD for free?
Four state registries publish filings online at no cost. They are California’s Department of Financial Protection and Innovation, Wisconsin’s Department of Financial Institutions, Minnesota’s CARDS system and Indiana’s Securities Division. Each holds only franchisors registered in that state, so check all four.
Which Items matter most for a kids franchise?
Items 5 through 8 for cost and required purchases, Item 12 for territory, and Items 19 through 21 for performance, system history and the franchisor’s finances. Add Item 1, where filings disclose the ride, inflatable and supervision rules that shape a kids venue’s labor model.
Does every FDD include earnings figures?
No. Item 19 is optional. If a filing leaves it out, the FTC’s position is that the franchisor and anyone selling for it may not make earnings claims at all, so figures offered outside the document deserve a hard question.
What is included in a franchise agreement?
The term and territory, every fee and how it’s calculated, operating standards, required suppliers, reporting and audit rights, insurance, renewal, transfer and termination terms, and post-term restrictions such as a non-compete. The FDD summarizes it in Items 9 and 17, and the full agreement is an exhibit.
Sources
1. Federal Trade Commission, Franchise Rule, 16 CFR 436.2 (timing of disclosure), eCFR. Accessed September 2026. https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436/subpart-B/section-436.2
2. Federal Trade Commission, Franchise Rule, 16 CFR 436.5 (the 23 disclosure Items), eCFR. Accessed September 2026. https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436/subpart-C/section-436.5
3. Federal Trade Commission, Franchise Rule, 16 CFR 436.7 (annual update within 120 days of fiscal year end), eCFR. Accessed September 2026. https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436/subpart-C/section-436.7
4. Federal Trade Commission, "Franchise Fundamentals: Taking a deep dive into the Franchise Disclosure Document," May 2023. https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-taking-deep-dive-franchise-disclosure-document
5. Federal Trade Commission, "A Consumer’s Guide to Buying a Franchise," September 2020. https://www.ftc.gov/business-guidance/resources/consumers-guide-buying-franchise
6. California Department of Financial Protection and Innovation, Regulated Entities List. https://dfpi.ca.gov/regulated-industries/regulated-entities-list/
7. Wisconsin Department of Financial Institutions, franchise search. https://apps.dfi.wi.gov/apps/FranchiseSearch/MainSearch.aspx
8. Minnesota Department of Commerce, CARDS franchise registrations search. https://cards.web.commerce.state.mn.us/franchise-registrations
9. Indiana Secretary of State, Securities Division, registration search. https://securities.sos.in.gov/public-portfolio-search/
10. Funbox Franchise, LLC, 2026 Franchise Disclosure Document, California DFPI record. Cover pages, Items 1, 5, 7 and 12. https://dfpi.ca.gov/search-result-detail/?id=564837&type=org
11. SharpSheets, Funbox franchise summary, accessed September 2026, for the merged investment range. https://sharpsheets.io/blog/funbox-franchise-fdd-profits-costs/
