What do I need to qualify for a fractional franchise exemption?
A: In order to qualify for a fractional franchise exemption by the terms in the FTC Franchise Rule you need to meet the following two conditions:
The franchisee with which it enters into a relationship has been "in the business represented by the franchise more than 2 years" and
the "sales arising from the relationship represent no more than 20 peercent of the sales in dollar volume of the franchisee"
Generally if you qualify for a fractional franchise exemption you do not need to go through the franchise registration process. Keep in mind it is important to check the franchise laws in your state or the state you are considering opening a fractional franchise to see if they allow fractional franchise exemptions or if they require special steps be taken prior to offering or selling a fractional franchise.
IMPORTANT DISCLAIMER: The information contained on this website is provided for general educational purposes only, should not be relied on as legal advice and does not serve to create an attorney client relationship. In utilizing this website you acknowledge that there is no attorney client relationship between you
and Charles N. Internicola, Esq. and that the information contained on this site does not and cannot serve as a replacement for the competent legal advice of a licensed attorney in your state. Further you acknowledge that any and all citations to cases and statutes must be independently verified by competent legal counsel to confirm the validity and accuracy of such information. The content of this site is subject to the Copyright of its author and owner, Charles N. Internicola, Esq.
