Maryland Franchise Laws and FDD Registration | Internicola Law Firm

Maryland Franchise Laws and FDD Registration

Maryland is a Franchise Registration State. The initial FDD filing fee is $500 and the annual renewal fee is $250.

Maryland Franchise Law

The State of Maryland is a franchise registration state. Under Maryland franchise law, before offering or selling a franchise in the state you must register your FDD with the Securities Division, Office of the Maryland Attorney General. The Securities Division oversees the FDD registration process and enforcement of Maryland’s Franchise Registration and Disclosure Laws. The initial FDD registration filing fee is $500 and the annual renewal fee is $250. Registration lasts for one year and requires annual renewal.

Maryland’s franchise law is known as the Maryland Franchise Registration and Disclosure Law enacted under the Maryland Business Regulation Code, Sections 14-201, et., seq. Under Maryland law, the relationship that creates a franchise is broadly defined to include any verbal or written agreement where: (a)  a purchaser is granted the right to market, sell, or distribute products or services under a marketing plan or system set by the franchisor; (b) the business, marketing plan, or system is substantially identified by the trademarks of the franchisor; and (c) the purchaser pays, directly or indirectly, a franchise fee.

If you need assistance registering your FDD with the Maryland Securities Division or to learn more about Maryland franchise law, call us at (800) 976-4904 or by email.

Maryland Franchise and FDD Registration FAQs

Who Regulates Franchises in Maryland?

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

What Should I Include with My Maryland Franchise Registration Application?

Your registration application should include:

Your Maryland registration application must comply with the Franchise Registration and Disclosure Guidelines published by NASAA and, effective January 1, 2020 must adopt and include the new NASAA Franchise State Cover Sheet.

What Are the Fees for Franchise Applications in Maryland?

The filing fee for initial FDD registration is $500 and the renewal fee is $250. The fee for filing an FDD amendments is $100.

Where Is the Registration Application Filed?

FDD registration applications must be filed with the Securities Division at the following address:

Securities Division
Office of the Attorney General
200 St. Paul Place, 20th Floor
Baltimore, MD 21202

The Division’s telephone number is (410) 576-6360 and their email is securities@oag.state.md.us.

How Long Will It Take for My Registration Application to Be Approved?

The Maryland Securities Division actively responds to FDD registration and renewal applications. How long registration takes depends on how complete your application and FDD are. Once you submit your application, you will be assigned a franchise examiner and you will receive a confirmation letter in the mail with your file number. Within 30 days of your initial submission the examiner will review your FDD and application and will then submit to you a letter advising of deficiencies and changes required for registration. Once all deficiencies in the examiner’s comment letter are resolved, you will receive an email advising you that your FDD has been registered and indicating the effective date of your registration. Your registration must be renewed annually and not later than 120 days following the end of your most recent fiscal year.

When Do I have to Renew and Update My Maryland Registration?

FDD registration lasts for one year following the effective date of your registration. An application to renew your registration must be filed not less than 15 calendar days prior to the one year anniversary of your effective date.

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:

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.

How Current Do My Financial Statements Need to Be?

The audited financial statements included in Item 21 of your FDD must have been prepared and issued within 120 days of the date of your registration application with the State of Maryland.

Does Maryland Impose Financial Assurance Requirements?

Yes, Maryland is one of the franchise registration states that imposes financial assurance requirements. During the registration and renewal process the state examiner will review the financial statements disclosed in your FDD. The examiner will evaluate your assets, liabilities, shareholders equity, and working capital. If the examiner determines that you possess insufficient assets and capital to fulfill your franchisee obligations,  your registration will be conditioned on your agreement and satisfaction of a financial assurance requirement such as the deferral or escrow of your initial franchise fees or the posting of a surety bond.

The standards and authorization for the imposition of financial assurance requirements is contained in the Maryland Franchise Law Section, Md. Business Regulation Code, 14-217. This section states:

… If the Commissioner finds that it is necessary and appropriate for the protection of prospective franchisees or subfranchisors because a franchisor has not made adequate financial arrangements to fulfill the franchisor’s obligations under an offering, the Commissioner may require the franchisor to escrow franchise fees or other money paid by a franchisee or subfranchisor until the obligations have been satisified.

What Actions Trigger Maryland FDD Registration Requirements?

It’s required prior to offering or selling a franchise in the state or offering or selling a franchise to a Maryland resident or for a franchised outlet to be located in Maryland. More specifically, Maryland franchise law is triggered by an offer to sell or a sale of a franchise if: (a) the franchisee is a resident of the state; (b) the franchised business will be or is operated in the state; (c) the offer to sell is made in the state; or (d) the offer to buy is accepted in the state.

Useful Maryland Franchise Laws Links

More Information

Visit our interactive franchise registration map and learn more about state franchise laws, FDD registration states, and required franchise filings.

To learn more about how we can help you with your Maryland FDD registration, contact us at (800) 976-4904 or contact us online

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