Of the states that require registration or filing of franchisors' Franchise Disclosure Document (FDD) (California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin), only California, Minnesota, Rhode Island, Washington and Wisconsin have online filing options. Of those 5 states, only Washington and Wisconsin require online filing. Wisconsin has required online filing for several years. However, Washington has only recently stopped accepting paper filings. We have researched the online systems and what is needed for these filings to prepare us for the 2020 renewal season.
NASAA (the North American Securities Administrators Association, Inc.) has adopted a new format for the State Cover Sheets that appear in Franchise Disclosure Documents ("FDDs") filed as part of state franchise registration applications. Below are some FAQs on this new requirement:
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There has been a fair amount of discussion in the franchising world recently about anti-poaching. Anti-poaching refers to provisions in franchise agreement that prohibit a franchisee from hiring the employees of the franchisor or the employees of other franchisees in the franchise system. A typical in-term covenant might read as follows:
Part 1 of this blog series addressed business issues to consider in deciding whether to franchise your business and preparations to be made before launching a franchise program. Part 2 of this blog series addressed preparation of the legal documents required under federal and state franchise law - the Franchise Agreement and the Franchise Disclosure Document ("FDD"). Part 3 of this blog series addressed state registration of franchises. This blog addresses compliance with franchise laws as a new franchisor begins offering and selling franchises. In addition to franchise disclosure and registration requirements, the federal and state franchise laws cover actions that must be taken when offering and selling franchises and actions that are prohibited in the offer and sale of franchises.
Part 1 of this blog series addressed business issues to consider in deciding whether to franchise your business and preparations to be made before launching a franchise program. Part 2 of this blog series addressed preparation of the legal documents required under federal and state franchise law - the Franchise Agreement and the Franchise Disclosure Document. This blog addresses state registration of franchises.
Part 1 of this blog series addressed business issues to consider in deciding whether to franchise your business and preparations to be made before launching a franchise program. This blog assumes that you have made the decision to franchise your business and you are ready to engage a franchise attorney to assist you with the legal compliance. The first step in legal compliance is to prepare a Franchise Agreement and the Franchise Disclosure Document required by federal and state franchise laws.
You may be considering franchising your business for a number of reasons. You may want to expand your business but don't have the capital to open numerous additional locations on your own. You may have people approaching you about buying a franchise because they love your business concept. You may like the idea of the brand and business you have built opening up in locations all over the country. However you come to the point of considering franchising, there are some initial steps to take before you launch into establishing a franchise program.
Details on the Itemized List
Franchisors whose business model involves physical locations for their units have certain specific interests and concerns relating to the leases entered into between their Franchisees and the Franchisees' landlords. Franchised locations, by virtue of being physical and visible to the public, can develop an ongoing brand awareness associated with their locations. Franchisors strive to protect that brand awareness by imposing certain restrictions and conditions on the Landlords who own and/or lease those locations.