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What Constitutes an Offer to Sell a Franchise?

What is or isn’t an "offer to sell a franchise" is important because, in many instances, your franchise disclosure obligations are triggered by not only the sale of a franchise, but an offer to sell a franchise. You cannot offer to sell a franchise to the residents of a particular state unless you have first complied with the Federal Franchise Rule and applicable state franchise laws. Before offering to sell a franchise in a particular franchise registration state, you must first ensure that your FDD was previously registered in that state.

An offer to sell occurs when there is a general discussion with a prospective franchisee about your franchise opportunity - it does not need to be a "formal" discussion. Also, generalized advertisements targeted to a particular state will constitute an offer to sell a franchise.

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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