New York Franchise Violations/Failure to Register FDD | Internicola Law Firm

Failure To Register Your FDD In New York

Franchisors and “licensors” are frequently faced with private lawsuits and attorney general investigations related to alleged violations of New York’s franchise registration laws. These claims, many times, involve an unsuspecting franchisor or licensor with limited activity in New York and an alleged failure to file/register a FDD with the New York Secretary of State. Examples include:

Unsuspecting Franchisors

New York’s franchise laws and FDD registration requirements are expansive and are not limited to franchisee outlets located within the State of New York. That is, franchisors are required to register a New York FDD not only when selling franchise units located within the state but also if the franchisor engages in “sales activities” from the state of New York – even if the “sold franchise unit” will be located in another state. For the unsuspecting franchisors sales activities that include negotiations that occur within the state of New York or from the state of New York may subject you to New York’s FDD registration requirements;

Licensors

Many times Licensors unknowingly transcend the line from “licensor” to “franchisor.” In many instances – based on New York’s expansive definition of a franchise – what you believe to be a license may constitute a franchise. When this happens, a complaint by a “licensee” may trigger an investigation by the New York Attorney General.

Enforcing New York’s Franchise Regulations

The New York Attorney General (Investor Protection Bureau) is charged with the enforcement of New York’s franchise regulations. When it comes to “registration violations” the best course of action (almost always) involves a clear and concise plan by which:

These corrective measures may include notice to the Attorney General Office and issuance of a recission notice.

Although potentially costly, recission notices represent an important “corrective measure” for franchisors. The recission notice, among other things, must offer the franchisee to a refund calculated based upon (a) “consideration paid to the franchisor” (b) plus interest at the rate of six (6%) percent running from the date of the franchisees payment and (c) less income earned by the franchisor.

The New York Attorney General maintains a sample recission form. This form is a good guide for franchisors. If properly prepared and delivered to a franchisee, the recission notice has the benefit of precluding franchisee litigation.

More Information

Let's Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your brand. Click on the button below or call us at (800) 976-4904.

Let’s Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.

Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.


This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

closeIcon