Franchise Update: Making Changes To Your Franchise Disclosure Document (Part B)

Interim Changes to Your FDD

Interim changes to your FDD are changes that are made during the fiscal year. These changes may be voluntary or involuntary, however; any changes that may materially affect a prospect must be amended in the FDD. Typical voluntary interim changes may include:

• Contract changes;
• Added or reduced fees; and/or
• The addition of new personnel.

Typical involuntary changes may include:

• New litigation, or developments in existing litigation;
• A material financial decline;
• The loss of franchisees; and/or
• The resignation of personnel.

A New York franchisee attorney can help you make the necessary changes.

Negotiated Changes

According to items 5 and 6 of the FDD, you are required to disclose any variation of the initial and ongoing fees which you are willing to negotiate, or have negotiated, in the previous fiscal year.

If the change(s) apply to all prospects and franchisees, you may want to use a standard addendum. If the negotiated change(s) was made under unique circumstances, making it highly unlikely that the change will be made again, you may be permitted to omit it from the FDD. To know whether or not a change is necessary, you can consult a New York franchise attorney.

Amending the FDD

To amend the FDD, you must "promptly" file a post-effective amendment with the addendum or revised pages, and stop your marketing activities until the amendment is approved (unless the state approves interim sales.) It is not necessary to update the entire FDD when updating a material change, though all material changes should be made.

An experienced New York franchise attorney can answer any of your questions regarding the need to update your franchise disclosures.

How a New York Franchise Attorney Can Help

A New York franchise attorney can help you throughout the disclosure process. By hiring an experienced attorney, you can avoid potential mistakes when delivering your Franchise Disclosure Document.

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 Charles N. Internicola, Esq's franchise law report to determine whether or not your business is right for franchising. Contact us today at 1-800-976-4904 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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