What is the effect of state franchise registration?

There are 14 registration states with each one having its own comprehensive franchise act. It is important to note that in those states, someone cannot simply start selling a franchise. They must first register their franchise with the state prior to sale. There is often a fee that is required with the application.

The state may make comments or object to certain parts of the franchise disclosure document drafted before the sale. The state may deny the franchise opportunity for any number of reasons. If the state believes that the franchise is illegal, the application will be denied. This differs from non-registration states in that once the federal requirements are met, there are generally no further barriers to selling the business.

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