California requires franchise registration renewals to be made no less frequently than on an annual basis. When submitting a franchise registration "renewal" application in the state of California franchisors must submit the renewal application in the same format as the original application and must include the following documents (same as for initial registration requirements):
- Uniform Franchise Registration Application Page;
- Supplemental Information page(s);
- Certification page;
- Uniform Consent to Service of Process;
- Sales Agent Disclosure Form;
- If the applicant is a corporation or partnership or limited liability company, an authorizing resolution if the application is verified by a person other than applicant's officer or general partner;
- Uniform Franchise Offering Circular or Uniform Franchise Disclosure Document (FDD);
- Application Fee;
- Auditor's consent (or a photocopy of the consent) to the use of the latest audited financial statements in the offering circular; and
- Advertising or promotional materials, if required.
The franchisor's financial statements for the most recent fiscal year must be contained in the FDD being submitted with the franchise registration application. The financial statements must be certified as an audit by an independent CPA and a manually executed auditor's consent must be submitted along with it for use of the financial statement in the UFDD.
One complete, updated clean copy of the UFDD and exhibits must be sent along with one copy of the changed pages only with the changes marked on them. Changes should be marked from the previous filing (but not highlighted in color).
The franchise renewal application along with supporting documents and the renewal application fee must be filed prior to the expiration date of the registration. In order for a franchise renewal application to be filed on time, the renewal application must be filed at least 15 business days prior to the expiration of the registration. Do not forget to account for holidays when calculating the 15 business days. When a completed application is filed at least 15 business days prior to the expiration date of the registration, the registration automatically renews effective at 12:00 pm, California time, on the date of which the prior registration is due to expire.
Renewal applications filed with 15 business days prior to the expiration date of the registration (but still prior to the expiration date) are still considered and treated as a renewal but during the time of lapse of registration the franchisor will not be allowed to offer or sell franchises within the state of California. If the renewal application is filed after the expiration date of the registration or if the franchise renewal application is filed without all necessary supporting documents and the full set of documents are not complete by the date of the expiration date of the registration, the franchisor may not offer or sell franchises in the state of California until the registration renewal application has been processed and approved by the California Department of Corporations. In addition to not being able to sell or offer franchises during this period, the registration fee must be paid instead of the renewal fee (currently a difference of $225).
For additional information on franchising a business or implementing cost-effective procedures and representation respecting the timely renewal of your FDD registrations, request a complimentary copy of "The Revised Franchise Formula: A Guide to Franchising Your Business in the New Economy" by franchise attorney Charles N. Internicola, Esq. For more information about Mr. Internicola, Esq. and his franchise compliance programs contact us at 800.976.4904.