Registering your FDD in New York: Does your FDD Adequately Disclose your “Franchisee Obligations”?

New York is a franchise registration state with franchise regulations and case law that is well defined and, in large measure, is consistent with the Federal Franchise Rule. While the "disclosure items" contained in your New York FDD are, generally, well understood, Franchisors should nevertheless ensure adequate disclosure of the Franchisors obligations to its franchisees. From a franchise development standpoint and to mitigate New York Franchise litigation, it is important for franchise counsel to adequately understand this disclosure obligation under New York law. Pursuant to New York State Franchise Regulations the following "franchisee obligation" obligations must be disclosed in your FDD:

  • The obligations that the franchisor will perform before the franchise business opens. Cite by section the provisions of the agreement requiring performance
  • The obligations to be met by the franchisor during the operation of the franchised business
  • The methods used by the franchisor to select the location of the franchisor's business
  • The typical length of time between the signing of the franchise agreement or the first payment of consideration for the franchise and the opening of the franchisee's business
  • The training program of the franchisor including: the location, duration and general outline of the training program; how often the training program will be conducted; the experience that the instructors have with the franchisor; charges to be made to the franchisee and who must pay travel and living expenses of the enrollees in the training program; if the training program is not mandatory, the percentage of new franchisees that enrolled in the training program during the preceding 12 months; and whether any additional training programs and/or refresher courses are required

When consulting with a franchise lawyer and preparing your New York FDD and registration "avoid the generic". That is, avoid generic disclosures and establish a firm understanding of the legal obligations that you will be assuming on the part of your franchisees. Insure that these obligations are adequately disclosed and reflected in your operations manual and franchise agreement.

For additional information about "franchising your business" or "registering your FDD in New York" request a complimentary copy of Charles N. Internicola's Franchise Law Report.



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