Franchise News
Franchise Registration States: What You Need to Know
If you plan on selling franchises, here’s what you should know about registration in the states where you plan to do business.
Not only do franchises have to provide a Franchise Disclosure Documents (FDDs) to franchisees, but they must also go through a registration process in certain states. These franchise registration states require franchisors to register their FDDs each year before they can offer or sell franchise locations.
Here’s an overview of the process and which states are (and are not) franchise registration states.
The Franchise Registration Process
Many states have regulatory oversight agencies responsible for handling the franchise registration process. These agencies review the FDDs submitted by the franchisors to ensure they comply with state regulations. If an agency requests clarifications or edits, the franchisor may be required to resubmit its FDDs. State registration generally takes 45 to 90 days, but some states may take longer to review and process registrations, depending on the time of year and the volume of work.
The requirements for franchise registration vary from state to state. Some may require additional disclosures to be filed, while others might require franchisors to renew their registration annually.
Three Types of Franchise State Registrations
Franchisors may encounter three primary types of franchise state registrations, each with its own requirements:
- Franchise Registration States: These states require franchisors to pay a fee and file an FDD, which must be evaluated and approved.
- Franchise Filing States: These states require franchisors to file an FDD and pay a fee, with no further approval needed.
- Franchise Non-Registration States: These states require franchisors to submit an FDD and adhere to Federal Trade Commission (FTC) guidelines to offer and sell franchises..
Franchise Registration States
- California
- Hawaii
- Illinois
- Indiana
- Maryland
- Michigan
- Minnesota
- New York
- North Dakota
- Rhode Island
- Virginia
- Washington
- Wisconsin
Franchise Filing States
Many franchise filing states require franchises to have federally registered trademarks.
- Florida
- Louisiana
- Kentucky
- Nebraska
- South Dakota
- Texas
- Utah
Others will allow a franchise without a federally registered trademark to file, but will require FDD registration.
- Connecticut
- Maine
- North Carolina
- South Carolina
Franchises that do not have federally registered trademarks can also file in Georgia and Louisiana.
Franchise Non-Registration States
- Alabama
- Alaska
- Arizona
- Arkansas
- Colorado
- Delaware
- Georgia
- Idaho
- Iowa
- Kansas
- Massachusetts
- Mississippi
- Missouri
- Montana
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- Oklahoma
- Ohio
- Oregon
- Pennsylvania
- Tennessee
- Vermont
- West Virginia
- Wyoming
It is important to note that even in states that don’t require registration, there are many other rules and regulations that franchisors must follow. Failure to register your FDD with the state, as well as any other documents that are required, can have serious consequences for the franchisor, including civil fines, contractual damages and even criminal liability, so be sure to check the requirements.
To learn more, check out these related articles:
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