You may have an understanding of the federal franchise laws that govern your franchise acquisition process. But you may not know that, depending on which state you intend to open your franchise business, there may be supplemental laws. Continue reading to learn the difference between franchise registration states and franchise filing states and how one of the experienced franchise law attorneys at FortmanSpann, LLC can help you navigate these regulations.
What are the franchise registration states?
Put simply, in franchise registration states, it is required for franchisors to register their Franchise Disclosure Document (FDD) with local state regulators. With this, an FDD is a legal document that is supposed to offer prospective franchisees a clear picture of how their relationship with the franchisor will be conducted from here on out. But in this case, local state regulators do not look into the accuracy of the disclosures; rather, they determine whether the disclosures satisfy the state regulatory requirements. There are 13 franchise registration states within the country, and they are as follows:
- California (CA).
- Hawaii (HI).
- Illinois (IL).
- Indiana (IN).
- Maryland (MD).
- Michigan (MI).
- Minnesota (MN).
- New York (NY).
- North Dakota (ND).
- Rhode Island (RI).
- Virginia (VA).
- Washington (WA).
- Wisconsin (WI).
Importantly, franchisors must register their FDD before they offer or sell a franchised business. And you should expect to receive a copy of the FDD within 14 days of your anticipated date of signing and payment of any initial fees. So if you still have not had this document delivered to you, then you must contact one of the seasoned franchise law attorneys to step in.
How are franchise registration states different from franchise filing states?
On the other hand, in franchise filing states, it is required for franchisors to submit a franchise filing with local state regulators. This filing may simply act as a notice with the state, alongside the payment of a fee. So, an examination or approval of the FDD is not necessarily involved. There are nine franchise filing states considered in the country, and they are as follows:
- Connecticut (CT).
- Florida (FL).
- Kentucky (KY).
- Nebraska (NE).
- North Carolina (NC).
- South Carolina (SC).
- South Dakota (SD).
- Texas (TX).
- Utah (UT).
Of note, the aforementioned states have franchisors with federally registered trademarks submit a franchise filing and fee. But in Georgia (GA) and Louisiana (LA), franchisors without federally registered trademarks are still made to execute this.
You must understand that you should not sign a franchise agreement or pay any fees before confirming that the franchisor has properly filed within your state. With all that being said, you should not have to go through your FDD alone. Instead, you should seek the assistance of one of the skilled franchise law attorneys from FortmanSpann, LLC. Contact our firm today.