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.

Top Resources for Franchising Your Business

  • videoImg

    Should I Franchise My Business?

    Franchising may be the next big step for your business and brand. So, how do you know whether or not you should franchise your business? How do you know if franchising is right for you? The answer depends on your business, your business goals, your personal goals, your budget and... read more

  • videoImg

    How to Franchise Your Business

    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

  • videoImg

    Franchising vs. Licensing Book

    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

all guides

  • None right now

all videos

  • videoImg

    Franchising Your Business: Advantages & Disadvantages

    Are you a successful business owner? Are you looking for ways to expand your business? If so, this article will provide the answers you need to decide whether franchising your business is the right step for you. In short, franchising allows you, the franchisor, to create a relationship among several... read more

  • videoImg

    Documents To Start A Franchise

    Under federal law, prior offering or selling a franchise in any state, franchisors are required to disclose a franchise disclosure document (FDD) to their prospective franchisees. In addition to federal law certain states, including the franchise registration states, require that franchisors register their FDD with the state. The legal documentation... read more

  • videoImg

    Is Your Business Franchisable?

    For very good reasons, the questions of “is my business franchisable?” and “can my business be franchised?” come up often. Assuming that you possess the right mindset and franchise goals (a topic that we discuss in a separate article) there are core franchise factors that either your business must possess... read more

all articles

  • videoImg

    Leveraging PR & Digital Media to Jumpstart Franchise Sales

    Key strategies to accelerate franchise growth for startup and emerging franchisors In this webinar, franchise attorney Charles Internicola and Nick Powills, founder of No Limit Agency and 1851 Franchise, discuss key strategies to accelerate franchise growth through PR and digital media. Some topics include: Steps franchisors should take when it... read more

  • videoImg

    Winning Insurance Strategies for Emerging Franchisors with Michael Porpora

    One of the biggest issues for emerging franchisors is not having a plan for insurance and system-wide protection. What do emerging brands need to know when they're starting off, who should they rely on, and how can they plan ahead? Get an insurance game plan to protect your franchise system... read more

  • videoImg

    How to Build a Great Franchise Logo & Brand with Dan Antonelli

    Key strategies for developing the right logo & trade dress to drive franchise growth with branding and design expert Dan Antonelli. Dan is the author of ‘Building a Big Small Business Brand’ and is the creative director of the branding firm KickCharge Creative. Learn how to drive franchise growth and... read more

all webinars

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