franchise sales acts

New York has enacted specific franchise laws, known as the New York State Franchise Act (NYFSA), that apply to the offer or sale of any franchise opportunity when the offer to sell the franchise originated in New York, the offer to purchase the franchise occurs in New York, the buyer is domiciled in New York, or the business that will be franchised is located in New York. However, while these laws intend to prohibit a franchise sale where the sale would lead to fraud or the likelihood that the franchisor’s promise would not be fulfilled, there is much more to the New York State Franchise Act, and in the below guide, we will explore this act in more detail. 

What Is the New York Franchise Sales Act?

The New York Franchise Sales Act was established to prevent franchisees from suffering losses due to incomplete information related to the following:

  • The franchisor-franchisee relationship
  • Information regarding the contract between the franchisor-franchisee
  • The franchisor’s business experience
  • Other elements that are relevant to the franchise offered

As a result, for a franchisee to have this information, the laws require the franchisor to provide the franchisee with all relevant details regarding the franchise sale. The registration process is one of the primary ways to make sure that franchisees have access to adequate data regarding the franchise before investing in it.

What Does the New York Franchise Sales Act Mean for Franchisees in New York?

If a franchisee has signed a franchise agreement with a franchisor in the last three years and believes that the franchisor made misrepresentations to get the franchisee to purchase the franchise, failed to provide material information concerning the franchise being sold, or failed to provide the franchisee with a compliant Franchise Disclosure Document (FDD), the franchisee may have a cause of action under the New York Franchise Sales Act against the franchisor, the franchisor’s directors or officers, and individuals that made the material omission or misrepresentation.

If these situations occur, the franchisee may be entitled to recover damages, and if the violation was willful, they may also be able to rescind the contract and obtain the return of the money they paid to the franchisor. They may even be able to recover their court and attorney costs.

Contact FortmanSpann Today To Learn More About New York Franchise Registration Requirements

If you believe that you have been a victim of material omissions, fraud, or misrepresentation in the sale of a franchise, reach out to an experienced franchise attorney about your rights under the NYFSA and other laws to determine whether you may be able to obtain relief, including monetary damages, or the ability to rescind your franchise agreement.

At FortmanSpann, our experienced legal team is committed to protecting our clients’ rights and ensuring they receive high-quality legal services. Our attorneys represent franchise clients across the United States in State Courts, Federal Courts, arbitrations, and mediations. If you need further information regarding the New York State Franchise Act, contact FortmanSpann today and learn more about how our firm can help you.