FDD Item 9 Explained: The Cross-Reference Table

Item 9 of a Franchise Disclosure Document is a table, not an explanation. It lists your principal obligations as a franchisee and, for each one, points you to the section of the franchise agreement that actually governs it. It is required by the FTC Franchise Rule at 16 CFR 436.5(i), which states: “Disclose, in the following tabular form, a list of the franchisee’s principal obligations.” The heading “FRANCHISEE’S OBLIGATIONS” appears above it in bold capital letters, and everything under that heading is a table.

That table may be the single most useful page in the entire FDD, precisely because of what it refuses to do. Item 9 does not state what any obligation actually requires of you. It tells you where in the franchise agreement that obligation lives. Read that way, Item 9 is an index, not a summary, and the practical order to work through an FDD is to open Item 9 first and use it to navigate into the agreement itself, rather than treating it as a formality to skim past on the way to Item 7’s cost table or Item 19’s earnings claims.

The three columns, and how to read them

The FTC-prescribed Item 9 table has three columns: Obligation, Section in the Franchise Agreement, and Disclosure Document Item. The first column names a category of duty you take on as a franchisee. The second names the specific section of the franchise agreement, by number, where that duty is actually written and made binding. The third cross-references the FDD item, elsewhere in the same document, where the topic is discussed in more depth.

Nothing in the table describes what the obligation requires you to do. A row for “fees,” for instance, does not state your royalty rate or your advertising contribution; it tells you which agreement section sets them and which disclosure item, Item 5 or Item 6, covers them elsewhere. The table’s whole job is routing you to the right place, not summarizing what is there.

The lettered rows

Item 9’s rows run from (a) through (y) over a fixed set of categories that appears the same way across every FDD, regardless of brand. Some of the categories most worth tracking down include (a) site selection, (f) fees, (r) records and reports, (s) inspections and audits, (t) transfer, (v) post-termination obligations, and (w) non-competition covenants. Where a category does not apply to a given franchise system, the franchisor enters “Not Applicable” in that row rather than leaving it blank.

Two of those rows, (r) records and reports and (s) inspections and audits, are where a lot of the ongoing operating burden of the franchise actually lives, and they are also the two rows this guide spends the most time on below, because they are the ones most often misread as saying more than they do.

Why you should read Item 9 first

Item 9 is the fastest way into the actual contract. Because every principal obligation is mapped to a specific franchise-agreement section number, you can use the table as a checklist: pick the rows that matter most to your situation, fees, transfer, non-competition, records and reports, inspections and audits, and go straight to the cited sections rather than reading the agreement cold from the first page, hoping to stumble onto what governs your day-to-day operation.

That is also why treating Item 9 as boilerplate to skip past is a mistake. It looks procedural because it is short and table-shaped, but it is the one item built specifically to shorten the distance between you and the language that actually binds you.

What real FDDs say about reporting and audits (2026)

These examples come from The Human Bean’s FDD issued February 25, 2026, amended May 5, 2026; PJ’s Coffee’s FDD issued April 10, 2026; and Jamba’s FDD issued March 27, 2026. They illustrate specific disclosures, not a market-wide rule.

The Human Bean. Item 6 lists “Audit Fee,” “Cost of audit,” “When incurred” and “See note 3.” Note 3 states:

If audit results indicate your failure to maintain and provide records as required by the Franchise Agreement or your underreporting of sales or purchases by more than 2 percent during the period covered by the audit, you must reimburse us for the cost of the audit and pay interest on any applicable revenue at a rate of 18 percent per year or the highest rate permitted by law, whichever is less. See Section 11.2 of the Franchise Agreement.

Section 11.2 also covers an audit resulting from failure to prepare, deliver or preserve required statements, reports or records. For underreporting, it uses “more than two percent (2%)” and requires payment within thirty days, including attorneys’ and accounting fees and costs. For reporting, Section 11.3.1 requires:

Not later than thirty (30) days after the end of each calendar month, on a THB-approved form, a profit and loss statement of the THB Outlet for the preceding calendar month prepared in accordance with generally accepted accounting principles;

PJ’s Coffee. Item 6 lists “Audit Fees,” “$2,500 - $8,000” and “To designated auditor.” Its due-date column says “After audit and net sales are determined to be understated by 5% or more.” Note 6 states:

If it is determined by an independent certified public accountant that the amount of net sales was understated by more than 5%, then Franchisee is responsible to pay all accountant’s fees incurred by Franchisor. The cost of this audit is estimated to be $2,500 - $8,000 but the cost will vary depending on the amount of work performed by the accountant.

The table says “5% or more” while the note says “more than 5%.” Confirm the controlling agreement language with your attorney before relying on either formulation.

Jamba. Item 6 lists “Audit,” “Cost of audit.” and “On invoice.” Its remarks state:

If we audit you and find that you understated Net Sales by 2% or more, you must reimburse us all reasonable expenses connected to the audit, review or examination (including any reasonable accounting and attorneys’ fees). We estimate that the typical audit costs would be approximately $1,000 to $4,000.

The agreement’s Section 14.2 instead uses “If any understatement exceeds 2% of Net Sales as stated in the report” for reimbursement of reasonable audit, review or examination expenses. Have your attorney confirm how that wording applies alongside Item 6. Section 14.3 requires “weekly reports detailing the Gross Sales and Net Sales during the preceding week and monthly profit and loss statements for the prior month’s operations” as part of the required reporting.

In these three FDDs, the audit-cost trigger is more than 2% (The Human Bean), 2% or more (Jamba’s Item 6) and 5% (PJ’s Coffee); other brands will differ.

Real Item 9 examples: rows (r) and (s)

These are the cross-references printed in the three FDDs. Jamba includes a separate “Section in Co-Branded Store Schedule” column; its entries are identified separately within the agreement column below. The Human Bean’s disclosure-item entries point back to Item 9 itself.

Brand	Row	Agreement section(s)	Disclosure item(s) referenced
The Human Bean	(r) Records and reports	Sections 11.3 and 11.4 of Franchise Agreement	Item 9
The Human Bean	(s) Inspections and audits	Sections 11.1, 11.2, and 11.5 of Franchise Agreement	Item 9
PJ’s Coffee	(r) Records and reports	Article 9.2	Items 8 and 17
PJ’s Coffee	(s) Inspections and audits	Articles 4.7, 5.6, 9.2 and 18	Items 6 and 11
Jamba	(r) Records/reports	Franchise Agreement: 14; Co-Branded Store Schedule: Not applicable	6
Jamba	(s) Inspections and audits	Franchise Agreement: 6.5, 7.3.A., 7.4, 11.5, 12.2, 12.3, 14, and 17.3.A.; Co-Branded Store Schedule: 20.H.	6

Item 6’s audit fee and Item 9 row (s): two different things

It is easy to conflate these because both involve the word “audit,” and they disclose different things. Item 6 discloses fees, and many FDDs list an “audit fee” there: a dollar cost the franchisor may charge, often connected to an audit that turns up an underpayment. Item 9 row (s), by contrast, does not disclose a fee at all. It points you to the section of the franchise agreement that describes the franchisor’s inspection and audit rights: what it can inspect, how, and what happens if the audit finds a shortfall.

Read Item 6 for what an audit might cost you as a line-item fee. Read the agreement section that Item 9 row (s) cites for what the franchisor can actually do, what triggers it, and what cost-shifting terms may apply, as the FDD examples above illustrate.

Questions to ask your franchise attorney about Item 9

Item 9 is a map. A franchise attorney is who turns that map into an understanding of what you are actually agreeing to.

• For each row that matters most to you, fees, records and reports, inspections and audits, transfer, non-competition, post-termination, what does the cited agreement section actually say?
• What does the section cited under row (r) require for reporting frequency and record retention, and do the reporting deadlines match the other disclosures in this FDD?
• What does the section cited under row (s) say about audit triggers, scope, and any cost-shifting threshold, and does its exact wording match the Item 6 table and notes?
• Which rows are marked “Not Applicable,” and does that match your understanding of how this brand’s system actually operates?
• How does the Item 6 audit fee interact with the audit rights described under row (s)? Could you owe both a flat fee and a separately cost-shifted audit expense?

Item 9 points to the clauses. Check them.

Our free agreement red-flags checklist covers default triggers, missed reports and fee-change rights, including audit fees. Plus the due-diligence kit.

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