Maryland Franchise Law and FDD Registration

The Securities Division of the Maryland Office of the Attorney General regulates the registration and enforcement of Maryland’s Franchise Registration and Disclosure Law.

• Filing fee ($500 initial; $250 renewal)
• Uniform Franchise Registration Application
• Uniform Consent to Service of Process
• Franchise Seller Disclosure Form
• State Cover Page (NASAA 2020 standard)
• Certification Page
• Franchisor’s Costs and Sources of Funds
• Auditor’s consent letter
• Copies of promotional and advertising materials
• Current audited financial statements

Within 30 days, an examiner reviews the application and issues a comment letter identifying deficiencies. Depending on your responsiveness, overall, the comment and registration review process takes approximately 3 months. Upon completion, you’ll receive an effective date confirmation.

FDD registration lasts one year. Renewal applications must be filed 15 days prior to expiration. Amendments must also be filed when a material change occurs (e.g., major franchisee terminations, company restructuring, or introduction of significant new products/services).

Once registered you have a continuing obligation to update and amend your FDD - including the filing of an FDD amendment application if, during the period of your registration, there is a "material change" as to the information disclosed in your FDD. Under Maryland law, examples of some "material changes" that trigger an amendment requirement and the filing of an amendment application, include:

• The termination of more than 10% of your Maryland franchisees within any 3 month period;
• The termination of more than 5% of all franchisees - no matter the location - within any 3 month period;
• A reorganization of your franchise company;
• A franchisor change of control , corporate name, or state of incorporation;
• The commencement of a new product or service requiring additional investments by franchisees; and
• The discontinuance or modification of a product or service of the system accounting for at least 20% of the franchisors gross sales.

There are other examples and it is important to be aware that if there is a material change as to the accuracy and/or information disclosed in your FDD, an amendment is required.

Yes. If your financials show insufficient capital, the state may require fee escrows, deferrals, or a surety bond before approving your registration. Learn more about financial assurance requirements.

You must register your FDD if:

• The franchisee is a Maryland resident
• The franchise will operate in Maryland
• The offer to sell or acceptance occurs in Maryland