Legal Enforcement of Franchise Registration Statutes (Part B)

Administrative Enforcement of Franchise Registration Statutes

State administrators are granted broad powers to enforce franchise registration statutes. One of the most significant is the ability to issue ex parte stop orders to prohibit franchise sales activities until a hearing can be conducted. These orders will remain in effect for a specified number of days.

Administrators also have the authority to:

• conduct public and private investigations;
• seek injunctive orders; and
• prosecute criminal actions (through the local district attorney's office).

Criminal Penalties for the Violation of Franchise Registration Statutes

If you violate New York's franchise registration statutes, you may face criminal penalties, including felony charges. Fines for each violation may be as high as $50,000. Ignorance of these statutes does not excuse an offender from liability.

Civil Actions for the Violation of Franchise Registration Statutes

Most enforcement of franchise registration statutes comes out of private lawsuits.

Private remedies for violations include:

• recovery of damages;
• equitable relief; and
• rescission.

Liability generally extends to a franchise's controlling persons, partners, officers, directors and employees who "materially aid" in the violation. A franchisor's failure to register with the state does not void the franchise agreement, or render it illegal. Unless state law makes the franchise contract voidable by the franchisee, the franchisee is not relieved of its obligations under the contract.

If you have unknowingly violated New York's franchise registration statutes and are facing legal action, you should consult with a New York franchise attorney who can talk to you about the nature of your violation. An experienced New York franchise attorney can work with you to register your franchise in order to help you avoid such critical violations that can quickly become a financial and professional nightmare.

Contacting a New York Franchise Attorney

If you are an entrepreneur who is interested in franchising your business, there is a lot you need to know, including the significance of evaluating your trademark and how to approach the preparation of your FDD. For a limited time, get New York franchise attorney Charles N. Internicola, Esq's Franchise Law Report to determine whether or not your business is right for franchising. Contact us today at 800-976-4904 for more information about Mr. Internicola's franchise law services in New York and how he assists entrepreneurs franchise their business nationwide.

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