Under the franchise laws a franchisor must issue and properly disclose Franchise Disclosure Document (FDD) before offering or selling a franchise. At the federal level and, in many states, there is no requirement to register an FDD. In the 13 states referred to as the franchise registration states, a franchisor must first register its FDD with the state franchise regulator before offering or selling a franchise in the state and, in the 9 states referred to as the franchise filing states, a franchisor must first file a notice with the designated state regulator before offering or selling a franchise within the state.
The Steps involved in registering your FDD or filing your FDD at the state level, include:
1. Identify the State(s) Involved in the Franchise Sale – First determine the state(s) that are involved in your franchise sale. Consider that more than one state may be involved and factors that you should evaluate with your legal counsel include: (a) the state where the franchised business will be established; (b) the franchisee’s state of residence, (c) any state where franchise sales activities / negotiations occurred, and (d) the state from which your franchise company operates.
2. Determine each States Franchise Registration and Filing Status – Determine the FDD registration and filing status of the state(s) involved in your franchise sale.
3. Register / File your FDD – If a state involved in your franchise sale is a franchise registration state you must file a Uniform Franchise Registration Application with the designated state franchise regulator. You must include with your application a copy of your FDD and payment for the state’s registration fee. Once the application is received it will be reviewed by a state regulator. The process and fees vary on a state-by-state basis and are outlined below. Likewise, for franchise filing states, each state requires a different notification and process that must be followed.
Below is a summary of the franchise registration states, the franchise filing states, the state regulators involved, how long FDD registration takes, and the application process.
We can help you timely and cost-effectively register your FDD and keep your franchise sales up and running. To learn more contact us at (800) 976-4904 or by email.
For franchisors that have a federally registered trademark: the franchise registration states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, Virginia, Washington, and Wisconsin. Each registration state designates a particular entity to regulate and oversee the franchise registration process and requires annual FDD registration. Reference to a federally registered trademark refers to the primary trademarks of your franchise system.
Additional Registration States if you do not have a federally registered trademark: in addition to the above-listed franchise registration states, if your primary trademarks are not registered with the United States Patent and Trademark Office (the “USPTO”) then you must also register you FDD Connecticut, North Carolina, South Carolina, and Maine.
Although each franchise registration state has adopted its own regulations and requirements, the application process itself is uniform and standardized franchise registration applications, forms, and instructions are published by the North American Securities Administrators Association (NASAA).
For franchisors that have a federally registered trademark: the the franchise filing states are Connecticut, Florida, Kentucky, Nebraska, North Carolina, South Carolina, South Dakota, Texas, and Utah.
Additional Filing States if you do not have a federally registered trademark: in addition to the above-listed franchise filing states if your primary trademarks are not registered with the USPTO then you must also file with Georgia and Louisiana. These filings are limited to the filing of a consent to service of process.
Timing varies from state to state and FDD registration can take anywhere from 20 days to three months depending on the completeness of your FDD and the time of year it is filed. Learn more about when FDD’s expire and require renewal.
Although each franchise registration state lists and identifies its franchise registration requirements, forms, and filing fees; the forms and instructions upon which your registration application will be based are published by NASAA. There is variation among the states regarding certain disclosure requirements and supplements to the NASAA forms. Generally, your franchise registration application will include the following forms:
As a franchisor, you need to understand the franchise registration process. Failure to comply with and properly manage state franchise registrations will harm your franchise sales process and may create significant franchise liability exposure.
To learn more about state-by-state franchise registration and filing information visit our interactive franchise registration map. To learn more about how we can assist with the filing and registering of your FDD Contact us at (800) 976-4904 or by email.
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