Franchise Registration Lawyer

Franchise registration is a key step for any franchisor planning to sell franchises in states that regulate franchise sales. The FTC Franchise Rule requires every franchisor to prepare a Franchise Disclosure Document (FDD) and deliver it to prospective franchisees, but there is no federal registration. Registration happens at the state level, and a franchisor must register its FDD in each registration state before offering or selling franchises there.

Attorneys Jason Power and Jonathan Barber at Franchise.Law assist new and existing franchisors to comply with their multi-state registration obligations. We represent franchisors across the United States, from first-time filings through annual renewals and amendments. Reach out to a franchise registration lawyer on our team today.

What Are the Components of Franchise Registration?

Registration states review the franchisor’s FDD, which is prepared under the Federal Trade Commission’s regulations (16 Code of Federal Regulations Part 436). Those regulations define 23 Items a franchisor must disclose to prospective franchisees, including:

• Detailed information about the franchisor’s business, its formation and growth history, executive resumes, litigation, and actual or anticipated bankruptcies
• Descriptions of the fees that a franchisee must pay as part of a franchise purchase price and as part of the franchisee’s regular operations, and a fair and reasonable estimate of the initial investment that the franchisee will incur before commencing operations
• Limitations on the products and services that the franchisee can offer or sell, any financing the franchisor offers, and uses of intellectual property, territorial and operational restrictions
• Expectations of how much time the franchise owner will devote to the operation of and participation in the franchisee’s daily business
• The duration and termination of the franchise, renewal requirements, contractual obligations, and financial reporting

Developing a thorough and accurate Franchise Disclosure Document before the commencement of franchise sales can save a business substantial amounts of time and resources as it expands into new states and territories. The franchise registration attorneys at Franchise.Law can provide an estimate of the fees and expenses that a business will incur to prepare that document.

How Do Different State Regulations Affect Franchise Registration?

Fourteen states require a franchisor to register or file before it offers or sells a franchise there: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. State registration fees range from $250 to $1,865, and the business will need to budget for those fees based on its territorial expansion plans.

Several other states, including Florida, Kentucky, Nebraska, North Carolina, South Carolina, Texas, and Utah, have business opportunity laws that require a franchisor to file for an exemption, and in some cases pay a fee, before selling there. Registrations must also be renewed each year and amended whenever a material change occurs.

Some states also offer exemptions for franchisors that meet net worth or experience thresholds. Those exemptions generally apply only to businesses that have an established history of successful franchise expansion. Contact the lawyers at Franchise.Law for specific information on the state regulations that will impact your business expansion plans.

How Can You Determine if Your Business is Ready for Franchising?

Franchise.Law can help you determine whether your business is ready to franchise and prepare a Franchise Disclosure Document (FDD) in anticipation of registration. That process includes an assessment of:

• The financial stability and profitability of your current business
• Whether you have established systems and infrastructure that can be documented and replicated by a third party separately from your involvement
• The potential demand for your products or services outside of your home territory
• The scope and extent of your brand, and whether that brand will provide viable support for marketing efforts in different regions
• The strength of your capitalization to support a franchising business model apart from your management and control of your organic business.

Our attorneys will provide straightforward advice on what you need to do to prepare your business for franchise registration.

Call Franchise.Law for Seasoned Franchise Registration Advice

Whether you are preparing to offer your first franchise or expanding into additional states, a franchise registration lawyer at Franchise.Law can help you navigate franchise registration requirements. Please contact our office today for straightforward advice and legal assistance with the registration process.