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New York State Franchise Rules: Sales Agent Disclosures

The Sales Agent Disclosure Form

Franchise brokers and franchise sales agents, more often than not, are necessary to an effective franchise sales program. When using franchise brokers and sales agents you must be aware of "extra" state specific disclosure requirements. In the State of New York prior to engaging and permitting a franchise broker or agent to engage in the franchise sales process you must file a "Sales Agent Disclosure" form with the New York State Attorney General. This is not a complex form to complete and it should be part of a systematic compliance program that you implement throughout the franchise sales process. Although this disclosure is relatively simple to prepare, in many instances (far too many times) it is overlooked and not filed. The end result is unnecessary "litigation risk".

The Sales Agent Disclosure Form (Form E) requires a franchisor to list the following information according to the State of New York:

  • Identification of Agent. All the persons who will offer or sell franchises in the state of New York along with their business address and telephone number, home address and telephone number, present employer, present title, social security number, birthday and employment history from the past five years;
  • Historical Information. State whether any person you are requesting to be a sales agent has any administrative, civil or criminal action pending alleging a violation of franchise or securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or any comparable allegations;
  • Criminal Information. State whether any of the sales agents listed have been convicted of a felony or pleaded nolo contendere to a felony charge or been held liable in a civil action by final judgment if the felony or civil action involved a violation or franchise or securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or comparable violations of law;
  • Legal History. State if any of the sales agents have entered into or been named in a consent judgment, decree, order or assurance under federal or state franchise, securities, anti-trust, monopoly, trade practice or trade regulations law;
  • Securities History. State whether any of the sales agents have been subject to an order or national securities association or national securities exchange as defined in the Securities and Exchange Act of 1934 suspending or expelling the person from membership in the association or exchange;
Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

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