What Constitutes an Offer to Sell a Franchise?
What is or isn’t an “offer to sell a franchise” is important because, in many instances, your franchise disclosure obligations are triggered by not only the sale of a franchise, but an offer to sell a franchise. You cannot offer to sell a franchise to the residents of a particular state unless you have first complied with the Federal Franchise Rule and applicable state franchise laws. Before offering to sell a franchise in a particular franchise registration state, you must first ensure that your FDD was previously registered in that state.
An offer to sell occurs when there is a general discussion with a prospective franchisee about your franchise opportunity – it does not need to be a “formal” discussion. Also, generalized advertisements targeted to a particular state will constitute an offer to sell a franchise.