Call Today: (800) 976-4904
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:
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;
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.
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.
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.
Are you a franchisor or a part of a franchise sales team? Do you want to learn more about franchise sale compliance and ensure that your sales practices comply with franchise laws and are consistent with best practices? Then this guide is for you. In this guide you’ll learn the... read more
In this guide you’ll learn the basics of franchising, how to franchise your business, and how to win at franchising. We’ll also take a deeper dive into legal requirements for franchising and why they matter, steps to take before and after you launch your franchise, and even some tips on... read more
When considering expanding a business both franchising and licensing are possible options. In this guide, you'll learn the differences of franchising and licensing and understand how each will affect you. read more
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.
An attorney client relationship is not established by submitting this initial contact information.