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Starting a Franchise FAQ's

Will you use a generic cut and paste FDD when franchising my business?

The Internicola Law Firm, P.C. maintains the belief that it is not a good practice to use a generic cut and paste method when dealing with a franchise disclosure document (FDD).

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How many months does it take to franchise my business?

Circumstances vary but at The Internicola Law Firm the time period for franchising your business typically takes six months.

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What individuals must be disclosed in FDD Item 2?

FDD Item 2 requires disclosure of the business experience of the franchisor's directors and principal officers.

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Are NY Franchise Agreements Negotiable?

Yes, in the State of New York, franchisees and franchisors may negotiate and modify a franchise agreement.

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What is Franchising All About?

Franchising is a legal and business model that allows successful business owners and entrepreneurs to take what has worked for them - their trademarks, business systems, product and services - and to expand by recruiting the assistance, capital and managerial efforts of third party franchisee partners.

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What Does it Mean to "Franchise Your Business"?

Well, you will be creating a legal and business framework for expansion.

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What are the Advantages to Franchising?

There are many advantages to franchising a business and these advantages relate to the expansion and growth of your business.

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What are the Disadvantages to Franchising?

The disadvantages of franchising relate to the additional layer or regulation and expense that many perceive to be a cost of franchising.

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Does a Franchisor Need to Disclose in its FDD Negotiated Changes Made To a Franchise Agreement?

Yes - especially with regard to FDD Items 5 and 6.

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Are Franchisor's Required to Meet Capitalization Requirements As a Condition for State Registration?

Yes. Prior to granting registration, many state regulators evaluate a franchisors capitalization.

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What is FDD Item 21?

Franchise Disclosure Document Item 21 is the mandated FDD Item section that requires the disclosure of a franchisors financial statements.

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What is the limited financial statement phase-in exemption for new franchisors?

Franchisors, in Item 21 of their Franchise Disclosure Document, must include and disclose audited financial statements.

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Do I have to modify my FDD to sell a franchise in New York State?

Yes. New York is a franchise registration state with its own state specific franchise laws.

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Do I have to modify my FDD to sell a franchise in North Dakota State?

Yes. New Dakota is a franchise registration state with its own state specific franchise laws.

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Do I have to modify my FDD to sell a franchise in the State of Rhode Island?

Yes. Rhode Island is a franchise registration state with its own state specific franchise laws.

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Do I have to modify my FDD to sell a franchise in the State of Michigan?

Yes. Michigan is a franchise registration / notice state with its own state specific franchise laws.

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Do I have to modify my FDD to sell a franchise in the state of Minnesota?

Yes. Minnesota is a franchise registration state with its own state specific franchise laws.

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What are SBA “7(a) Loans”?

“7(a)” loans refer to the Small Business Administrations primary business loan program designed to assist start-up and existing small businesses.

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What Fee Does The SBA Charge a Borrower for a SBA 7(a) Loan?

SBA 7(a) Loans are small business loans that involve a guarantee by the Small Business Administration.

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Do Lenders Pay a Fee for SBA 7(a) Guaranteed Loans?

Yes. SBA 7(a) Loans are small business loans that are partially guaranteed by the Small Business Administration.

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What Are Collective Action Clauses In Franchise Agreements?

Collective action clauses allow a franchisor to implement unanticipated marketing programs and fees.

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What is a Franchise Seller Disclosure Form and Who Must File One?

The franchise seller disclosure form is a form that franchisors must file with state regulator agencies.

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Does the State of Texas Require Registration of a FDD Prior to a Franchisor's Offer or Sale of a Franchise in the State?

No. But, Texas does require registration of business opportunities.

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Is Franchising Right for Your Business?

As a successful business owner and entrepreneur chances are that you have thought about "franchising" and have questioned whether or not franchising is right for your business.

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What Happens When You Start A Franchise?

When you "franchise your business", as a "franchisor", you are taking your existing business and establishing the framework by which you will license and grant third party franchisees the legal right to…

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What are the Steps to Franchising Your Business?

According to national franchise lawyer Charles N. Internicola there are 7 Steps to Franchising Your Business.

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Is Franchising a Proven Business Model?

Yes. So much so that the successes of franchising are evident and obvious in almost every aspect of our daily lives.

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What is "Franchising"

At the most basic level, "franchising" is a business model and expansion tool designed to facilitate business growth and development.

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How can I find a lawyer who specializes in franchising?

There are a number of sources and credentials to evaluate a lawyer who specializes in franchising.

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How to contact franchise lawyer Charles N. Internicola?

Franchise Lawyer Charles N. Internicola can be contacted the following ways…

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When should I speak to a franchise lawyer?

There are many situation a franchise lawyer may be needed. Some of the most common situations when you should speak to a franchise lawyer are…

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Can I franchise my business?

Yes. Franchising is a business expansion model focused on the multi-unit development and growth of a successful business.

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Does Washington State Recognize a Fractional Franchise Exemption?

Fraction franchise exemptions are extremely limited and the recognition of this exemption varies from state to state.

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Are there Fractional Franchise Exemptions in Hawaii?

Fractional franchise exemptions are not recognized in Hawaii.

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What documents do I need to sell a franchise?

The documents needed to sell a franchise include the following…

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What Do I Need to Do to Become a Franchisor?

To become a franchisor you will need to be the owner of a successful business and have a system in place is replicable and that easily allows you to train and support other people interested in buying a franchise from you.

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What is New York's Net Worth Franchise Registration Exemption?

Under New York's franchise law one exemption to the FDD registration mandate applies to franchisors who clearly meet minimum "net worth" criteria.

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What is New York's "Isolated Sale" Franchise Registration Exemption?

The Isolated Sales exemption refers to a limited exemption to New York's Franchise FDD "Registration" mandate.

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

The existing franchisee exemption refers to a limited exemption to New York's franchise FDD "registration" mandate.

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What is a "Marketing Plan" under New York's Franchise Law?

Under New York's Franchise regulations, a "marketing plan" is defined as…

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What is Franchise Compliance?

The term "franchise compliance" relates to a number of factors respecting a franchisor's compliance with federal and state franchise laws.

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What is a Franchise Compliance Program?

Franchise compliance programs are business and legal procedures and systems typically designed by a franchise lawyer with the assistance and input of the franchisor.

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What are Franchise Compliance Services?

Franchise Compliance Services relate to legal services provided to franchisors to ensure that they consistently meet State and Federal Franchise laws and regulations.

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What is the definition of a "franchise" in the State of New Jersey?

Pursuant to New Jersey law (NJ Stat Section 56:10-3) a "franchise" is defined as…

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Is New York a Franchise Registration State?

Yes, New York is a Franchise Registration State.

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Is California a Franchise Registration State?

Yes, California is a franchise registration state.

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Is Illinois a Franchise Registration State?

Yes, a franchise in the state of Illinois must be registered.

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Is Minnesota a Franchise Registration State?

Yes, a franchise must be registered in the state of Minnesota.

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Is Maryland a Franchise Registration State?

Yes. For additional information on registering a franchise in the state of Maryland, please visit Maryland State Franchise Disclosure Document (FDD) Registration.

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Does the State of Wisconsin Regulate Franchise Sales and FDD Registration?

Yes. Wisconsin is a franchise registration state that requires franchisors to register and file an FDD prior to offering or selling franchises in the State of Wisconsin.

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Is Washington a Franchise Registration State?

Yes, franchises in the state of Washington must be registered.

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Is South Dakota a Franchise Registration State?

Yes, South Dakota is a franchise registration state.

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Does Virginia Require Registration of a Franchisor's FDD

Yes. Virginia is a franchise registration state which means that before you offer of sell a franchise in the State of Virginia, you must register and file your FDD.

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Do I Need an Operations Manual Before I Start to Franchise My Business?

No. One critical issue in establishing a franchise includes the detailed documentation and integration of your systems and procedures into an overall compliance program.

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How to Franchise My Business?

For the entrepreneur who has established a successful business "franchising your business" requires compliance with the Federal Franchise Rule and State Specific franchise regulations.

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Should I Franchise My Business?

Franchising is a business and distribution model that permits a successful business owner and entrepreneur to achieve unit expansion (regionally or nationally) through the the utilization of franchisee capital and managerial effort.

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What constitutes an "offer to sell" a franchise?

Franchise regulation and a franchisors obligation to provide a prospective franchisee with a FDD is, typically, triggered by the offer of a franchise.

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How Does a Franchisor Make Changes to an FDD?

Making changes to your FDD - as a franchisor - should be viewed as an on-going process and as part of an on-going franchise compliance program.

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What Constitutes an Offer to Sell a Franchise in Washington State?

In terms of a franchisors FDD and franchise disclosure obligations franchise regulation is triggered by a franchisors offer and/or sell of a franchise.

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What Does it Take to Franchise My Business?

If you are a successful business owner and have thought about franchising your business then the steps to follow include…

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How Long does it Take to Register an FDD in Illinois?

According to the Illinois Attorney General franchise registration in Illinois becomes effective on the 21st day after the date of the filing the required FDD and application.

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What is FTC Rule 436?

FTC Rule 436 was established in 1979 by the Federal Trade Commission to regulate the franchise industry by requiring disclosure requirements to be set forth by franchisor prior to offering or selling a franchise.

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What do I need to do to apply for a fractional franchise exemption in New York?

First understand that if you are going to rely on a fractional franchise exemption, you need to proceed with caution and evaluate a number of factors related to your franchisees, the experience of your franchisees and their sources of revenue.

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What is the Hawaii Franchise Investment Law?

The Hawaii Franchise Investment Law is the current law for franchisors and franchisees in Hawaii.

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What do I need to do to Qualify for a Fractional Franchise Exemption?

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…

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What is a Fractional Franchise?

The term "fractional franchise" relates to a federal exemption to certain franchise / FDD disclosure obligations.

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What is a Franchise Fee under California law?

A franchise fee according to the California Franchise Investment Law 31011 is any fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business under a franchise agreement, including, but not limited to, any payment for goods and services.

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Is there a franchise registration fee in California?

Yes. In the state of California, there is an initial registration fee of $675 payable to the California Department of Corporations.

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How long does it take for a franchise registration application to be processed in California?

According to the California Franchise Investment Law a franchise registration application should take until the 15th business day at 12 o'clock noon after filing the registration application, copy of FDD, payment, and all other supporting documents.

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Do I have to alter my FDD to franchise in another state?

If you are considering franchising in other states, you need to consider what needs to be done with your franchise disclosure document (FDD).

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How do I register a franchise in California?

To register a franchise in California the following documents are necessary and must be submitted to the California Department of Corporations along with a check to register the franchise in the amount $675 payable to "California Commissioner of Corporations".

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What needs to be done to offer and sell a franchise in California?

In order to offer and sell a franchise in California the franchise must be registered with the California Department of Corporations.

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Are the any franchise laws in Alabama?

Alabama does not currently have any state specific franchise laws. Franchisors in Alabama should abide by the Federal Trade Commission's Federal Franchise Rule.

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Does Alaska Have Franchise Laws?

The State of Alaska has not enacted state-based franchise laws or regulation, but has enacted a business opportunity law.

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Are the any franchise laws in Arizona?

Arizona does not currently have any state specific franchise laws.

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Does the State of California Regulate Franchising?

Yes, Franchisors in the State of California are required to abide by both the California Franchise Investment Law and the Federal Trade Commission's Federal Franchise Rule.

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Can My Former Franchisor Shut Down My Business?

Yes - if you are operating a competitive business and your business was formerly operated as a franchised location.

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Where are Franchises Registered in Maryland?

To register a franchise in the State of Maryland your FDD, a franchise registration application and other applicable forms and fees must be filed with the Maryland Securities Division.

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What Remedies are Available upon Termination or Nonrenewal of a Franchise in New York?

If you have invested in a franchise in New York, and at the time of renewal the franchisor refuses to renew the franchise agreement, there may be legal remedies available.

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What is the Uniform Franchise Offering Circular?

When starting a franchise, you will be required to provide potential franchisees with specific information about the franchise.

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What is a "franchisee fee" under New York law?

Under New York law (13 NYCRR § 200E) "Franchise Fees" are broadly defined and are intended to apply to business relationships and transactions that qualify as a franchise. New York defines a franchise fee as…

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What are the NY/NJ laws for bulk sales? Do I have to notify the state and if so, when?

In New York and New Jersey, the purchaser of a New York business must provide the state with a "pre-closing" notification of the proposed business sale.

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What is a "Trade Secret" in a Franchise Agreement?

When it comes to franchising, a trade secret is confidential information that relates to the operation of the franchised business.

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What is a "non-compete agreement" in a franchise agreement?

A non-compete agreement in a franchise agreement serves as an agreement between a franchisor and a franchisee advising the franchisee not to engage in competing activities for a certain time and geographic location.

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Where do I register a franchise in Indiana?

If you are starting a franchise in Indiana you must register your franchise with the state of Indiana.

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Is there a franchise registration fee in New Jersey?

No. Since New Jersey is not a franchise registration state then, naturally, there will be no New Jersey franchise registration fee.

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Can I Register a Trade Secret?

Many business leaders have questions about whether trade secrets require a filing with a state or federal government agency.

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What are the Benefits of the International Trademark Registration Process?

Ever since the United States put the Madrid Protocol into effect in 2003, international trademark registration has become easier for US business owners.

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What is an FDD Item 19 Financial Performance Representation?

Item 19 of a franchisor's franchise disclosure document (FDD) refers and relates to the mandatory disclosure of financial performance representations made by the franchisor to prospective franchises.

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Can a Franchisor Disclose its FDD Electronically?

Yes. The federal franchise rule permits a franchisor to electronically disclose its FDD to a prospective franchisee.

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What is the FDD Waiting Period?

It is the period of time a franchisor must wait before accepting money or signing a contract with a new franchisee.

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What Federal Law Regulates Franchise Relationships and Franchise Disclosures?

The "Federal Franchise Rule".

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What is the New York FDD Registration Filing Fee?

As of May 2009 the New York State filing fee for the initial registration of a Franchise Disclosure Document (FDD) is $750.00. The New York filing fee for the annual renewal of a previously registered Franchise Disclosure Document (FDD) is $250.00.

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When must a franchisor renew its New York FDD registration?

In the state of New York a previously registered franchise disclosure document (FDD) must be renewed on an annual basis within 120 days of the close of the franchisor's fiscal year.

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Does New Jersey require franchise registration?

No. Since New Jersey is not a franchise registration state, the offer and sale of franchises in the State of New Jersey are governed by the Federal Franchise Rule and the regulations established by the Federal Trade Commission.

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What are the franchise registration states?

Franchise registration states are those states that require franchisors to register and file their FDD prior to offering or selling a franchise.

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Does New York require franchise registration?

Yes. In addition to the Federal Franchise Rule and the regulations established by the Federal Trade Commission, a franchisor must register its Franchise Disclosure Document with the New York Attorney General prior to offering or selling a franchise in the State of New York.

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What is a Franchise Disclosure Document?

A Franchise Disclosure Document ("FDD") is a required legal document that contains information and disclosures that a franchisor must provide to a prospective franchisee before selling a franchise.

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What information is required in a franchise disclosure document?

Under the Federal Franchise Rule, a Franchisor's Franchise Disclosure Document ("FDD") must include the following twenty-three disclosures / items…

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