Franchise Law: Franchise Registration
Certain states require franchisors to file disclosure documents with the state before franchises can be sold in that state. Failure to comply with this requirement can have disastrous legal consequences. That is why it is important to have an experienced lawyer on your side to help you avoid potential unpleasant surprises down the road.
David T. Azrin, Attorney at Law, has spent decades representing both franchisors and franchisees in all matters involving franchise law. From his office in New York, he can handle franchise registration and other issues for clients across the U.S. and throughout the world. To learn more, call 212-935-3131.
States Requiring Registration
In 13 states, including California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin, the franchisor must file the disclosure document with the state agency, and obtain state agency approval of the disclosure document before the franchisor can start selling franchises in that state. Michigan has a simple notice filing requirement, while Oregon has a disclosure requirement, but no filing requirement. Separate notice filings may be required in some states under state business opportunity laws, including Connecticut, Florida, Kentucky, Nebraska, North Carolina, South Carolina, Texas and Utah.
What About States Not Requiring Registration?
In all other states, the franchisor does not have to file anything with any state agency. However, the franchisor must still comply with federal regulations which require the franchisor to provide the disclosure document to the potential franchisee and get a receipt from the franchisee. If the Federal Trade Commission (FTC) is made aware that the franchisor has failed to provide the disclosure document, the FTC can take legal action against the franchisor.