FDD Item 7: Estimated Initial Investment
By Scott Engler · Averan Advisors · Updated 3 October 2026
Item 7 of the Franchise Disclosure Document estimates what it costs to open one location. It is a table with a low and a high amount for each expense, and a total at the bottom.
What Item 7 must show
The Franchise Disclosure Document (FDD) is the document a franchisor must give a buyer at least 14 calendar days before the buyer signs or pays anything. The Federal Trade Commission's Franchise Rule sets its 23 sections, which are called Items.
Each row gives the expense, the low and high amount, how it is paid, when it is due and who receives it. The table must include an amount for additional funds to run the business during an initial period of at least three months.
Lines that usually appear in Item 7
- The initial franchise fee from Item 5.
- Real estate, leasehold improvements and the build-out of the space.
- Equipment, furniture, fixtures and signs.
- Opening inventory and supplies.
- Security deposits, licenses and insurance.
- Grand opening marketing.
- Additional funds for the first months, which is the cash to run the business before sales cover costs.
Where owners run short
The additional funds line covers a fixed period, often three months. A location that takes longer to reach the sales level where it covers its costs needs more cash than that line shows. Build a month-by-month cash forecast from opening until sales cover costs, and compare the total with the Item 7 line. The brand pages in Averan Franchise show each brand's Item 7 total next to its Item 19 sales.
Common questions
Does Item 7 include working capital?
Yes. Item 7 must include additional funds to run the business during an initial period of at least three months.
Is the Item 7 total what I will spend?
It is the franchisor's estimate of the range for one location. Your lease, build-out and the time it takes to reach break-even can move your cost outside that range.
Sources
This page is an educational summary and is not legal advice. Read the FDD itself, and have a franchise attorney review it before you sign.