What States Require Franchise Registration?
Some states require franchisors to register with state agencies before the franchisor is allowed to sell a franchise in that state. The states that require franchise registration are:
- New York
- North Dakota
- Rhode Island
- South Dakota
After submitting an initial franchise application, the state will review the application and associated documents. The state may require changes to the documents and provide comments before the application is approved.
Generally, a franchisor can only offer a franchise for sale once it is approved by the registration state, although each state’s process varies.
Once the initial registration application is approved, the franchisor must also file a renewal application each year. The renewal usually involves submitting an updated Franchise Disclosure Document and a renewal fee.
The franchisor is also required to revise its Franchise Disclosure Document within a reasonable time to include any material changes to the franchise business. You should consult a franchise attorney to determine what constitutes a “material change” and whether an update needs to be made.
Some business opportunity states also have laws that may require franchisors to apply for authorization to sell franchises. In most but not all of those states, a franchisor does not have to apply for authorization if the franchisor has a federally registered trademark. Other considerations often apply.
An experienced franchise attorney can assist you with the franchise registration process in each registration state, can help you understand the variations between each state, and can help you meet the requirements to sell your franchise.
Written By Brad Denton
40 N Central Ave #1400
Phoenix, AZ 85004
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