Franchisors: The Importance of Verifying a Franchise Broker's Registration in Washington State
In the State of Washington, franchisors must ensure that their brokers are registered with the Washington State Department of Financial Institutions prior to permitting a broker to sell a franchise in Washington State or offer to sell a franchise from within Washington State. Not only is it a violation for a franchise broker to engage in Washington State sales activities prior to registering, an affirmative obligation is placed on franchisors and subfranchisors. That is, it is unlawful for any franchisor, subfranchisor or franchisee to employ a franchise broker without the franchise broker registering. Avoid this unnecessary issue by ensuring that your internal compliance programs require written confirmation of a brokers registration status.
For a franchise broker to register in the State of Washington, the following steps must be satisfied:
- Submit a completed Washington State broker registration application;
- Disclose the brokers proposed method for doing business;
- Disclose a list of the brokers qualifications and business history;
- Disclose any injunction or administration order(s) or conviction(s) of the franchise broker; and
- Disclose the franchise brokers financial history.