OFFICE HOURS: 9AM - 5PM MON TO FRI
The FTC requires that all franchisors provide prospective franchisees with their Franchise Disclosure Document (FDD). This mandatory legal document serves as a pre-sale disclosure by offering essential details on the franchise system’s owner, costs, and other essential details.
If you have questions or concerns about legal compliance, risk management, and brand protection, you have come to the right place. If you are wondering when your FDD expires and requires renewal, contact us today. We could walk you through the process and answer any questions you may have.
A franchisee’s FDD typically expires 120 days after its fiscal year-end. For most companies that use a December 31 calendar cutoff, that date is April 30. However, some states, including California and Hawaii, have tighter deadlines: 110 and 90 days, respectively.
Failing to renew a Franchise Disclosure Document (FDD) is a serious matter, making it illegal to offer or sell franchises in registration states. A franchisor must “go dark,” or suspend all negotiations, sales, marketing activity, and renewal of existing franchisee contracts until the FDD is updated and re-registered.
If your brand continues to sell franchises with an expired FDD, the practice violates state and federal laws. The company would likely face consequences such as penalties, fines, and a damaged reputation in the industry. In many states, a lapsed registration is treated as a new, initial filing, resulting in higher fees and potentially longer, more intense scrutiny from state examiners. Additionally, franchisees who purchased a franchise while your FDD was expired may have the right to cancel their agreement and demand a refund.
The process to renew your FDD requires updating the document each year by or before the expiration date. Your brand must ensure that various financial statements and franchisee lists are current, and performance data remains compliant. These key steps help illustrate the basics of updating existing FDD prior to expiration:
Our attorneys could help you update your FDD and ensure it is compliant with state law.
If you have questions about when your FDD expires or the renewal process, we are here to help. Franchise.Law is based in Charlotte, North Carolina, and we could assist your franchise with all of its legal needs, including FDD renewals and beyond. Together, we would walk you through every step of the process, whether you are a start-up or are expanding across the country. We could help you avoid going dark while protecting you from the real risk of lawsuits and penalties. Reach out to us today.