What’s an FDD? A Guide for Childcare Franchise Candidates

Are you interested in learning more about franchise disclosure documents (FDD) specifically in the childcare franchising space?

If you’re exploring franchise ownership in the early childhood education space, whether with The Goddard School or another premium childcare brand, you’ll quickly encounter the term FDD. Understanding this document is one of the most important steps in your due diligence process.

Below is a practical, childcare-specific breakdown of what an FDD is, why it matters, and how to use it to evaluate a daycare or preschool franchise opportunity.

What Is an FDD?

FDD stands for Franchise Disclosure Document. The Federal Trade Commission (FTC) legally requires franchisors to provide this document to prospective franchisees at least 14 days before any agreement is signed or money is exchanged.

Each FDD is required to provide certain information on the franchise system, including:

• Business Model
• Franchisor’s History and Experience
• Costs and Fees
• Legal and Regulatory Obligations
• Training, Support, and Operating Requirements
  

For childcare franchises, the stakes are especially high—you're not just investing in a business, but in a brand trusted by families with their children.

Why the FDD Matters in Childcare Franchising

Opening a childcare franchise is fundamentally different from other franchise opportunities, such as retail or food service.

Franchising in early childhood education comes with unique operational and regulatory complexities that can vary by state and local market. A childcare franchise candidate should pay close attention to how the franchisor addresses areas like:

• Licensing requirements
• Staff-to-child ratios
• Background checks and safety compliance
• Curriculum and training standards
• Parent expectations around quality and trust

The FDD helps you understand how a franchisor supports you through these areas and what responsibilities you will be expected to manage as the owner.

An FDD contains 23 standardized items. Below you'll find a breakdown of some of the most relevant ones for childcare franchise candidates.

Financial Performance (Item 19)

If provided, this section of the FDD is typically one of the most popular items because it provides insight into the historical financial performance of the system.

Item 19 of The Goddard School FDD demonstrates the strength of its business model. In 2025, mature schools* achieved the following results:

• Average Annual Gross Revenue: $2,507,631
• Average Annual EBITDA: $546,554
• Average Annual EBITDA Percentage: 21.8%

*Based on mature school performance (open 18+ months). You should refer to Item 19 of Goddard Franchisor, LLC’s 2026 Franchise Disclosure Document for more information regarding the reported earnings of Goddard School franchises. Your individual results may differ. There is no assurance that you will earn as much as the amounts reported by Goddard School franchisees.

You’ll notice some brands also include breakdowns of their costs including payroll, occupancy, and miscellaneous items.

In the childcare industry, labor is typically the largest expense due to the staffing needs required for compliance and quality.

Estimated Initial Investment (Item 7)

This section outlines the estimated initial investment to open your franchise.

In childcare franchising, this often includes:

• Real estate or land acquisition
• Construction or build-out of a childcare facility
• Playground equipment and classroom furnishings
• Licensing and inspection costs

For example, the estimated initial investment to open a Goddard School typically ranges from approximately:

• $1,003,500 to $1,503,000 (Build-to-suit lease)
• $1,736,500 to $5,032,000 (Retrofit lease)
• $5,493,500 to $8,908,000 (Buy land and build)

Because every market and facility is different, total startup costs can vary. Item 7 of Goddard Franchisor’s 2026 Franchise Disclosure Document provides more detailed information on these costs.

Initial & Other Fees (Items 5 & 6)

This section of the FDD highlights the upfront and ongoing fees you’ll be responsible for as a franchisee within the brand’s system.

At The Goddard School, the ongoing fees include:

• Royalty Fee: 7% of Gross Receipts
• Marketing Fee: 2% of Gross Receipts (can increase to a maximum of 4%. See Item 5 of Goddard Franchisor, LLC’s 2026 Franchise Disclosure Document).
• Proprietary Curriculum Fee: $700 per Month

Unlike many franchise categories, childcare brands often include curriculum and education-related fees, reflecting the importance of delivering a consistent academic experience.

Training & Support (Item 11)

Because childcare is regulated and operationally complex, training and support matters more than in most franchise industries.

In this section, The Goddard School FDD outlines:

• Initial and ongoing training programs
• Required director training programs
• Licensing and compliance guidance
• Ongoing operational and field support

These requirements highlight both the risk management needs of childcare and the importance of a franchisor providing robust support systems.

Outlets and Franchisee Information (Item 20)

Item 20 is one of the most valuable – and often underutilized – sections of the FDD. In addition to listing contact information for current and former franchisees, it provides a snapshot of the entire system’s footprint.

For example, inside Item 20 of The Goddard School FDD you can see:

• The total number of franchised and company-affiliated schools
• The number of openings, closures, transfers, and terminations
• Year-over-year system changes

This section can help you understand whether the brand is expanding steadily, maintaining stability, or experiencing closures or contraction. It also gives you a practical next step: speak with current and former franchisees and ask about their experience.

How to Use the FDD During Your Due Diligence

The FDD is not meant to be read once and filed away. Use it as a working document throughout your evaluation process.

As you review it, consider asking:

• What are the biggest drivers of startup costs in my market?
• How does the franchisor support licensing and opening milestones?
• How do mature schools perform, and what factors influence performance?
• What do existing franchisees say about training, support, and day-to-day operations?

Many candidates also choose to review the FDD with an experienced franchise attorney and financial advisor before signing an agreement.

Check Out These Additional Resources

We hope this guide gives you a better understanding of what an FDD is and how it can help you evaluate childcare franchise opportunities.

At The Goddard School, we’re looking for passionate franchisees in available markets across the country who are excited to grow with a premium childcare brand.

Here are some additional online resources you may like to check out:

• Is Owning a Childcare Franchise Right for You?
• 10 Best Childcare Franchise Opportunities In 2026
• How to Get Funding to Buy a Childcare Franchise

If you’re ready to begin exploring childcare franchise ownership with The Goddard School, you can submit your information here and a Goddard team member will be in touch.