The California Department of Financial Protection and Innovation (DFPI) oversees all franchise registrations and enforces the California Franchise Investment Law (CFIL).

A complete California FDD registration includes:

• Initial registration fee of $1,865 (renewals: $1,245)
• Uniform Franchise Registration Application
• Signed and notarized Signature Verification Page and Acknowledgment
• Franchise Disclosure Document (with all exhibits and California addendum)
• Audited financial statements
• Guarantee of Performance (if required)
• Cover letter with Org ID and fiscal year-end
• Sales Agent Disclosure Forms
• Internet Ad Exemption Notice (if applicable)
• Consent to Service of Process (if applicable)

Applications must be filed online through the DFPI’s portal.

he cover letter must state:

• Franchisor name, Org ID (if known), and fiscal year-end
• Whether documents will follow separately
• If any securities were sold in California
• Acknowledgement that registration expires 110 days after fiscal year-end

Although California law allows for automatic effectiveness after 30 business days, most applications receive a comment letter from DFPI within that window, which tolls automatic approval. In practice, registration typically takes 8–12 weeks, depending on the quality of your FDD and response time to examiner comments.

Registrations must be renewed within 110 days of the end of your fiscal year. For franchisors on a calendar year, the renewal deadline is typically April 20.

es. Common exemptions include:

• Seasoned Franchisor Exemption
• Large Investment Exemption
• Large Franchisee Exemption
• Existing Franchisee Exemption
• Insider and Fractional Franchise Exemptions

These exemptions are fact-specific and may require exemption filings. FDD disclosure is still required, even if registration is exempt. Learn more about California’s FDD registration exemptions.

California FDD registration is not required for franchise sales to out of state residents where franchised business will be located and operated outside the State of California. Section 31105 of the California Franchise Investment Law states:

"Any offer, sale, or other transfer of a franchise, or any interest in a franchise, to a resident of another state or any territory or foreign country, shall be exempted from the provision of Chapter 2 (commencing with Section 31110) of this part, if all locations from which sales, leases or other transactions between the franchised business and its customers are made, or goods or services are distributed, are physically located outside this state."

California requires that franchisor include audited financial statements within the FDD, including:

• Three years of income statements, cash flows, and stockholder equity
• A signed CPA consent letter

All financial statements must dated be within 90 days of filing with the State or California will require the submission of supplemental interim financials. Start-up franchisors that are new to franchising may be eligible for to start the franchising with phased-in audited financial statements that start with an audited opening balance sheet.

For most new franchisors and franchisors that, based on their audited financial statements, possess limited working capital and equity, California DPFI will impose financial assurance requirements that, tyoically, require the franchisor to either

• Defer collection of initial franchise fees until the franchisee is open for business and all of the franchisor's pre-opening obligations are satisfied;
• Escrow of initial franchise fees with an authorized California financial institiution; or
• Post a surety a bond

In practice escrow conditions are difficult to satisfy and, depending on the industry, franchise brands will elect to defer initial franchise fees or purchase a surety bond.

If you negotiate material changes to your franchise agreement:

• You must disclose negotiated terms in an FDD appendix
• Provide copies to future franchisees upon request
• File Notices of Negotiated Sale within 15 business days
• Amend your FDD if negotiated terms alter core Items

Disclosure rules differ depending on whether changes benefit the franchisee. Documentation must be kept for five years

When dealing with negotiated changes a distinction should be made between:

1. (negotiated changes that are for the benefit of the prospective franchisee by conferring the prospective franchisee with additional benefits; and
2. negotiated changes that, on the whole, do not confer additional benefits to the franchisee.

Negotiated Changes Benefitting the Franchisee: For negotiated changes made for the benefit of a franchisee, under California Corporations Code Section 31109.1 you must supplement your California FDD disclosures by adding a separate FDD appendix that provides prospective California franchisees with a "summary description of all of the material negotiated terms during the prior 12 month period." The summary should include:

• Offering Circular Item Number:_____________________
• Description of Provisions in Currently Registered Offering Circular:_____________________
• Description of Change: _____________________
• A statement that "...copies of the negotiated terms are available upon written request..." and "contact information of the franchisor's representative from whom negotiated terms can be obtained."

When submitting FDD renewal applications you must certify or declare in an appendix to your application for renewal that you have complied with all of the requirements under California Corporations Code Section 31109.1.

Negotiated Changes that Do Not Benefit the Franchisee: If the negotiated changes do not, on the whole, confer additional benefits to the prospective franchisee, then under California Code of Regulations, Title 10, Section 310.100.2 you must:

• Provide the prospective franchisee with copies of all Notices of Negotiated Sale of Franchise forms filed with the State of California in the past 12 months, if any;
• File a Notice of Negotiated Sale of Franchise form with the State of California within 15 business days after the negotiated franchise sale is consummated;
• Before selling another franchise, amend your California registered FDD within the specific FDD Item or an addendum to the FDD, notification of the negotiated changes, stating: "The terms of Item(s) _________ of this Offering Circular have been negotiated with other franchisees. A copy of all Negotiated Sales Notices filed in California in the last twelve months is attached as Exhibit _____."
• Provide all future prospective California franchisees with copies of all Notices of Negotiated Sale of Franchise forms filed with the State of California in the past 12 months; and
• When submitting FDD renewal applications the franchisor must certify or declare in an appendix to its application for renewal that it had complied with all of the requirements under California Code of Regulations, Title 10, Section 310.100.2(a)(4).

No, unless you comply with the DFPI’s Internet Ad Exemption requirements. Ads must not target California residents and must include required disclaimers.