What Is Item 23 in an FDD? Receipts and the 14-Day Waiting Period

Item 23 — Receipts is the shortest item in the FDD and the one that does the most legal work. It contains two identical acknowledgment forms at the back of the document. When a prospective franchisee signs and dates one of them, the FTC's mandatory waiting period starts running, and the entire compliance machinery of the Franchise Rule clicks into motion.

What Item 23 requires

The FTC Franchise Rule at 16 CFR §436.5(w) requires the franchisor to include, at the back of every FDD, two duplicate copies of an acknowledgment of receipt. The receipt is a short form — usually one page — that names the franchisor, identifies the FDD by issue date, and provides spaces for the prospective franchisee to print their name, sign, and date.

The two copies serve a specific purpose:

• One copy is signed and returned to the franchisor. It is the franchisor's evidence that the prospective franchisee received the FDD, and on what date.
• The other copy stays with the prospective franchisee. It is the prospective franchisee's evidence of the same.

The receipt itself is not a contract. Signing it does not commit the franchisee to anything. It does not waive any rights. It is purely an acknowledgment that the document was delivered.

The receipt also lists, in many FDDs, the names and contact information of all franchise sellers — every person involved in offering the franchise to the prospective buyer (the franchisor's sales staff, brokers, or third-party representatives). This list is part of the receipt because the rule requires the franchisee to know who they were talking to before they signed.

What it actually tells you — and triggers

The receipt is the legal trigger of the 14-calendar-day waiting period mandated by 16 CFR §436.2. The rule prohibits a franchisor from doing two things until at least 14 calendar days after the prospective franchisee receives the FDD:

1. Requiring the prospective franchisee to sign any binding agreement — the franchise agreement, area development agreement, lease, personal guaranty, or any related contract.
2. Accepting any payment from the prospective franchisee in connection with the franchise sale.

The 14-day clock starts on the date written on the signed receipt. The day of receipt is day zero; counting begins the next day; signing or paying may occur on day 15 or later.

A separate 7-calendar-day rule governs the franchise agreement itself: under §436.2(b), the franchisor must deliver the franchise agreement in its final, completed form at least seven calendar days before the prospective franchisee signs it. The 14-day FDD clock and the 7-day final-agreement clock run in parallel; both must be satisfied before signing.

These waiting periods exist for a single reason: to give a prospective buyer time to read the document, talk to franchisees listed in Item 20, consult an attorney and an accountant, and make a decision under no time pressure from the franchisor's sales process. The receipt records the date that obligation begins.

What it does NOT tell you

Several common misreads of Item 23:

• The receipt is not a commitment. A signed receipt is evidence of delivery, not evidence of intent to buy. Many prospective franchisees sign receipts on multiple FDDs while comparing brands and never sign a franchise agreement with any of them.
• The 14 days are calendar days, not business days. Weekends and holidays count. A receipt dated December 18 allows signing on or after January 2.
• The waiting period has no waiver mechanism. The 14-day rule is structural: pressure to sign before day 15, even at the prospective franchisee's request, is inconsistent with how the rule is built.
• The receipt does not start any disclosure deadline. The franchisor's obligation is to deliver the FDD a sufficient number of days before signing or payment. Because the date on the signed receipt is the anchor the Rule uses to measure the waiting period, a date earlier than actual delivery would not satisfy the Rule's delivery-date requirement.
• State law may add more. Thirteen states have their own franchise registration regimes (California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin) and impose additional disclosure or filing obligations. Item 23 covers the federal floor, not the full picture in registration states.

Red flags to watch for

The receipt is procedurally simple. The flags are about the process around it:

1. Pressure to sign the franchise agreement quickly after the receipt. Anyone urging a prospective franchisee to "just initial here" within days of receiving the FDD is asking them to violate (or asking the franchisor to violate) the 14-day rule. The 14-day clock exists precisely to remove that pressure.
2. Backdated or undated receipts. The date on the signed receipt is the rule's anchor for the waiting period. Discrepancies between the actual delivery date and the date on the receipt are issues counsel typically investigates if a dispute arises later.
3. Missing seller list. Item 23 should identify every person who participated in the franchise sale. If the salesperson the prospective franchisee actually spoke with is not listed, that omission is a flag — both for compliance and because that person may be operating outside the franchisor's authorization.
4. Updates to the FDD during the waiting period. If the franchisor amends the FDD or modifies the franchise agreement after the receipt is signed, a new disclosure or a fresh waiting period may be required. The franchisee should ask, in writing, whether the document they are about to sign matches the document they received.
5. No copy retained by the franchisee. The franchisee should keep the second receipt copy. It is the franchisee's only documentary evidence of when the clock started, and is the basis of any later claim that the waiting period was violated.

How Item 23 fits into the document

The full reading order of an FDD usually ends here. The franchisor has disclosed who they are and their litigation history (Item 1, Item 2, Item 3, Item 4), what it costs to start (Items 5 and 7), what it costs to operate (Item 6), what the franchisee gets in support (Item 11), how the system has performed financially and operationally (Item 19, Item 20, Item 21), and what the franchisee will be required to sign (Item 22). Item 23 is the procedural close of the document — the moment a prospective buyer formally acknowledges receiving all of it and the cooling-off period begins.

The period between signing the receipt and signing the franchise agreement is the only window in the relationship when a prospective franchisee can walk away with no signed contract and no money committed. The 14-day rule exists to preserve that window.