Your State Laws and Your Franchise Disclosure Document (Part A)

As your business franchise grows and expands, you may be interested in establishing franchises in other states. While all franchisors must abide by the Federal Trade Commission's Franchise Rule of 2007, several states also have specific laws for franchises that must be addressed.

When franchising your business, you should establish a working relationship with an experienced New York franchise lawyer as soon as possible. Your lawyer can assist you in planning your financial disclosure document as well as advise you on the state-specific laws regarding establishment of franchises.

Registering Your Franchise Disclosure Document in Another State

If you are considering establishing franchises in other states, you will have to research the state-specific laws regarding franchise operations.

States fall into 3 categories regarding franchise laws:

• franchise registration states;
• filing states; and
• non-registration states.

A franchise registration state requires a new franchise to register their franchise and file a copy of their franchise disclosure document with the state. Filing states only require the filing of the franchise disclosure document and no registration. Non-registration states do not require registration, nor do they require the franchise disclosure document to be submitted.

Currently, 15 states require franchise registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, North Dakota, New York, Oregon, Rhode Island, South Dakota, Virginia, Washington and Wisconsin. The 9 filing states include Connecticut, Florida, Kentucky, Maine, Nebraska, North Carolina, South Carolina, Texas and Utah. The remaining 26 states and Washington D.C. are non-filing states.

Each state has its own filing fees and submission process, and the government office handling the filing of franchise disclosure documents varies from state to state. It is important to have a New York franchise lawyer who understands the franchising process in other states before attempting to expand into new territories.

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