The Franchise Disclosure Document holds every number that matters for whether a franchise system thrives or bleeds outlets. It's 300 pages of legalese. Franchise X-Ray turns it into a scored dossier in plain English: outlet closure rates, litigation history, earnings-claim reporting, and the franchisor's own financial disclosures, with every number quoted and cited to the source filing.
Oct 2026: the FTC announced a proposed $1.85M settlement over deceptive franchise earnings claims and is reviewing whether earnings disclosures should become mandatory. Diligence season is open.
The X-Ray Score starts at 100 and deducts points only for adverse indicators disclosed in the FDD itself. Higher means fewer disclosed red flags. It is a summary of disclosed indicators, not a prediction of your success or earnings. Item 19 earnings claims are never score inputs; if a franchisor makes them, we quote them verbatim, separately, with the franchisor's stated basis.
| Component (FDD source) | Deduction |
|---|---|
| Outlet closure rate, latest 3 years (Item 20). Closed outlets divided by opened plus closed outlets; transfers shown separately and excluded. | Closure rate (in percent) x 1.75, capped at 35 points |
| Litigation disclosures (Item 3). Count of proceedings the franchisor discloses. | 2 points per proceeding, capped at 20 points |
| Going-concern or emphasis-of-matter language in the audited financial statements (Item 21), quoted verbatim in the dossier. | 15 points if present |
| Ongoing fee burden (Items 6 and 7). Royalty plus marketing-fund contributions, as a percent of gross sales. | 1.5 points per percentage point above 8 percent, capped at 15 points |
| Territory and term (Items 12 and 17). | 8 points if no protected or exclusive territory is granted; 7 points if the initial term is under 10 years |
The score never goes below 0. Every dossier shows each component, the math, and the FDD item and page behind it.
We extract, compute, and cite. We don't advise, and we don't audit or verify the franchisor's claims. Every number carries its FDD item and page. Take the dossier to your attorney; the validation script tells you who to call and what to ask.
Franchise X-Ray is independent: we are not a franchise seller, broker, or agent. We never sell franchises, never arrange franchise sales, and take no referral fees from franchisors. We are not affiliated with or endorsed by any franchisor, the FTC, or any state regulator.
This report is not legal advice, investment advice, or tax advice, and it is not a recommendation to buy or not buy any franchise. All findings come solely from Franchise Disclosure Documents as filed in public records and reflect only the numbers and disclosures in those records. Closure rates reflect how many outlets closed or transferred, not whether franchisees were profitable. Litigation history does not prove a franchisor is dishonest. Our score is a summary of disclosed indicators, not a prediction of your success or earnings. You should review the current FDD, obtained directly from the franchisor, with your own attorney and accountant before making any franchise investment decision.
All sales are final. Full terms: Terms of Service.
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Is this legal advice? No. It is extracted public-record data with math. Your attorney decides.
Where does the data come from? Public records, principally state franchise registration portals where FDDs are filed. Every dossier states its source, the FDD filing date, and the filing jurisdiction. If a brand's FDD is not publicly available, we tell you that upfront and do not sell the report.
Do you make earnings claims? No. If the franchisor's Item 19 contains financial performance representations, we quote them verbatim with the franchisor's stated basis. We never evaluate whether the franchisor's substantiation is adequate, and we never project your earnings. Note: the franchisor is not required to include Item 19 at all; when it does, the FTC's position is that any earnings claim made anywhere must appear in Item 19, and you can ask the franchisor for written substantiation.
How fresh is the data? Every dossier shows its FDD filing date. The franchisor may have amended the FDD after that date, so obtain the current FDD from the franchisor and verify before you invest.
Are you a franchise broker? No. We do not sell franchises, arrange sales, or take referral fees. We sell interpreted public-record dossiers.