What is New York's "Existing Franchisee" Franchisee" Franchise Registration Exemption?

A: The "existing franchisee" exemption refers to a limited exemption to New York's franchise FDD "registration" mandate. This exemption applies to a franchisor's obligation to "register" its FDD with the state but does not relieve a franchisor of its obligation to disclose and deliver a current FDD to prospective franchisees in accordance with New York's franchise laws.

The "existing franchise exemption" applies to a franchise sale by a franchisor to one of the franchisor's existing franchisees where:

(i) The existing franchisee has actively operated a franchise of the selling franchisor for the eighteen months preceding the offer; and

(ii) The existing franchisee purchases the franchise in order to operate the business and not for the purpose of resale; and

(iii) The franchisor reports the sale to the department of law on the form required by the department within fifteen days of the sale.

Always speak with your franchise counsel before relying on any franchise registration exemption.

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