What Are Franchise Registration States?

The Franchise Disclosure Document (FDD) is a critical part of the franchise process. It allows potential franchisees to perform due diligence on a brand prior to investing in a franchise system. 

Formerly called the Uniform Franchise Disclosure Document, the FDD is required by the Federal Trade Commission (FTC), and consists of 23 sections that outline the roles and responsibilities of both the franchisor and the franchisee. The FTC requires that a franchisor provide this document to the potential franchisee at least 14 days prior to the signing deadline. 

But sometimes, individual states require you to register your FDD, and those that don’t may still require additional paperwork. If you plan to sell franchises, you should make sure that you know the rules in these individual states. 

What Are Franchise Registration States?

Franchise Registration States are those states which require that franchisors register that franchise disclosure document with them before the franchisor can offer or sell franchises in the state.

“States regulate many investment activities, similar to the regulation of stock sales,” said Charles Internicola, a New Jersey-based franchise attorney. “Some states view protection of franchise buyers as a priority.”

According to Internicola, in addition to FDD registration requirements, some states have additional requirements for new franchisors: There are state-specific franchise laws and franchisee relationship laws, which are all in addition to the Federal Franchise Rules.

Generally, state registration takes anywhere from 45 days to 90 days, but Internicola says that certain states, depending on volume and time of year, take longer to review and process registrations than others.

Which States Are Franchise Registration States?

There are currently 13 franchise registration states. These include:

• California
• Hawaii
• Illinois
• Indiana
• Maryland
• Michigan
• Minnesota
• New York
• North Dakota
• Rhode Island
• Virginia
• Washington
• Wisconsin

What Documents Does Each State Require?

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, said Internicola.

Internicola’s law firm provides an interactive map detailing state-specific franchise laws, allowing you to review the requirements from each state.