Franchise Business Licensing / Registration
The Federal Government and States have a strong interest in regulating franchises because franchisees are often required to make substantial investments to obtain a franchise. Hundreds of thousands of people invest in franchise operations. At the State level, franchises are regulated to protect consumers from parting with their money on a fraudulent deal and to provide an avenue of restitution should a franchisor not be compliant with State laws. As licensing specialists, we are familiar with the licensing laws and requirements of each state. Let LicenseLogix streamline the application process for your franchise, ensuring that you are fully compliant with all registration requirements.
The Franchise industry is regulated by both federal and state law. The Federal Trade Commission requires all franchises to be in compliance with the Franchise Rule, which mandates disclosure documents to be provided to prospective purchasers.
Some States require these documents to be on file. While in other states, if a franchise is in substantial compliance with the Federal Trade Commission they will be exempt from registration, however, the franchise might be required to file an exemption form. In states where filing or registration is required the franchise must be in compliance with the state law before selling a franchise in the state. Other states only require that disclosure documents to be provided to the purchaser at a designated time period before the final sale.
Documents included in state applications vary. Some states might require the franchisor to include the following; Uniform Franchise Registration Application, Supplemental Information Form, Franchise Broker Disclosure Form, Uniform Consent to Service of Process, Corporate Acknowledgment and Certification Page, Advertising materials and the FDD Franchise Disclosure Document and a Surety Bond.
Ramifications of Non-Compliance
A franchise operating without compliance with Federal or State laws, may be subject to large fines, orders to cease and desist, and in some cases a reversal of the franchise sale along with attorneys fees and a monetary award to the consumer.
How we help your business:
- We stay up-to-date with changing requirements and forms so you can focus on the job at hand.
- We complete applications efficiently and correctly, allowing your in-house staff to save valuable time struggling to obtain the proper licenses or registrations.
- Once your documents have been filed, we ensure that you remain compliant with all State laws as these filings are often renewed on an annual basis.
More Resources:North American Securities Administrators Association
Bureau of Consumer Protection
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