Franchise Registration States Guide

When you decide to franchise your business, navigating the complex web of federal and state regulations can be daunting. Franchise Genesis, with its rich expertise in the field, aims to simplify this journey for franchisors, ensuring compliance and success. This guide delves into the intricacies of state franchise laws, focusing on the different regulations that various states have in place concerning franchise registration.

Before delving into the specifics of state regulations, it’s crucial to understand the role of the Franchise Disclosure Document (FDD). This document serves as the cornerstone of the franchisor-franchisee relationship, providing prospective franchisees with comprehensive details about the franchisor’s business. This ensures transparency and aligns with the guidelines set by the Federal Trade Commission, creating a foundation of trust.

State Franchise Laws

States in the U.S. generally follow one of three systems: franchise registration state, franchise filing state, or non-registration state. Each category determines the procedures and fees involved, the level of oversight by the state regulator, and the specific disclosure requirements. Navigating these systems is vital for franchisors to ensure they remain compliant and effectively expand their brand across different jurisdictions.

Franchise Registration States

A franchise registration state mandates franchisors to record their FDD registration with the state regulator before offering or selling franchises. This state law ensures that potential franchisees receive all pertinent information, and it gives the state an opportunity to review the franchisor’s documents for compliance.

CALIFORNIA

Situated in Sacramento, the California Department of Financial Protection and Innovation is the governing body for franchises. The state’s commitment to transparency and safeguarding potential franchisees is evident in its structured registration process. Franchise Registration Fee California: $675.

HAWAII

The Commissioner of Securities under the Department of Commerce and Consumer Affairs in Honolulu oversees franchise operations in Hawaii. Being an island state, its unique demographics make franchise regulations vital. Franchise Registration Fee Hawaii: $125.

ILLINOIS

The Franchise Division Office of the Attorney General located in Springfield reviews and approves franchise disclosures, ensuring franchisors maintain clarity and integrity in their offerings. Franchise Registration Fee Illinois: $500.

INDIANA

The Franchise Division Office of the Secretary of State in Indianapolis oversees franchise registrations. With a rich history of business growth, Indiana values the structured process to ensure potential franchisees are well-informed. Franchise Registration Fee Indiana: $500.

MARYLAND

In Baltimore, the Office of the Attorney General Division of Securities plays a pivotal role in regulating franchise operations. The state, known for its business-friendly environment, emphasizes transparency in franchise dealings. Franchise Registration Fee Maryland: $500.

MICHIGAN

The Michigan Attorney General’s Office in Lansing is at the helm of franchise regulations, ensuring that franchisors and franchisees operate under a transparent system. Franchise Registration Fee Michigan: $250.

MINNESOTA

The Minnesota Department of Commerce in St. Paul is dedicated to fostering an environment where franchises can thrive with integrity. Their meticulous review process safeguards both franchisors and potential franchisees. Franchise Registration Fee Minnesota: $400.

NORTH DAKOTA

Overseen by the North Dakota Securities Department in Bismarck, franchise regulations here ensure that businesses maintain the high standards expected within the state. Franchise Registration Fee North Dakota: $250.

NEW YORK

The bustling hub of New York entrusts its franchise regulations to the New York State Department of Law. In a state renowned for its vast business landscape, these regulations are essential for maintaining clarity in franchise operations. Franchise Registration Fee New York: $750.

RHODE ISLAND

The Franchise Office Division of Securities in Cranston ensures that franchisors adhere to state guidelines, reflecting Rhode Island’s commitment to business transparency and ethics. Registration Fee Rhode Island: $500.

SOUTH DAKOTA

South Dakota’s Department of Labor and Regulation in Pierre oversees franchise operations, reflecting the state’s commitment to fostering a business environment grounded in trust. Registration Fee South Dakota: $250.

VIRGINIA

The State Corporation Commission Division in Richmond plays a pivotal role in guiding franchisors through the intricacies of state-specific regulations. Their oversight ensures that both franchisors and franchisees operate with clarity and confidence. Registration Fee Virginia: $500.

WASHINGTON

Situated in Tumwater, the Department of Financial Institutions Securities Division ensures that all franchisors adhere to state standards, emphasizing the state’s dedication to fair and transparent business practices. Registration Fee Washington: $600.

WISCONSIN

In Madison, the Department of Financial Institutions Division of Securities works diligently to maintain the state’s reputation as a hub for transparent and ethical business operations. Registration Fee Wisconsin: $400.

Franchise Filing States

Filing states require franchisors to file some basic information about their franchise offering, but unlike registration states, there’s no substantive review of the FDD. The filing often serves as a notice to the state that the franchisor intends to offer or sell franchises. The fees in these states are typically lower than in registration states, and the process is generally simpler.

Connecticut

A pioneer in business innovations, Connecticut facilitates franchises with an initial filing fee of $400.

Florida

Known for its dynamic business landscape, Florida has a franchise filing fee of $100.

Kentucky

A state that thrives on business innovation, Kentucky has a franchise filing fee of $0, welcoming franchisors with its streamlined process.

Maine

With its unique business landscape, Maine offers franchisors an opportunity to expand with a minimal filing fee of $25.

Nebraska

Nebraska’s central location and business-friendly approach make it a favorable destination for franchisors. The state has a filing fee of $100.

North Carolina

A state known for its dynamic business and innovation, North Carolina ensures a simple process for franchisors with a filing fee of $250.

South Carolina

With its rich history and growing business scene, South Carolina welcomes franchisors with a filing fee of $100.

Texas

The vast expanse of Texas offers myriad opportunities for franchisors. Its streamlined process is reflected in its minimal filing fee of $25.

Utah

A state that’s rapidly emerging as a business hub, Utah simplifies the franchising process with a filing fee of $100.

Non-Registration States

In the franchise world, the term “Non-Registration States” refers to states that do not have specific franchise registration or disclosure guidelines at the state level that go beyond the United States guidelines. In these states, franchisors are not required to register their Franchise Disclosure Document (FDD) with a state regulatory agency before offering or selling franchises within that state.

However, it’s important to note that even in Non-Registration States, franchisors must still comply with the federal franchise rule set forth by the Federal Trade Commission (FTC). This rule mandates that franchisors provide potential franchisees with the FDD at least 14 days before any franchise agreement is signed or any money is exchanged. The FDD is a comprehensive document that provides detailed information about the franchisor and the franchise offering to help potential franchisees make informed decisions.

In summary, while Non-Registration States don’t have their own specific state-level franchise regulations, franchisors operating in these states are still bound by the federal franchise rules.

Franchise Genesis: Your Expert Franchise Consultants for Navigating State Laws

While these state laws may seem complicated, with the help of our franchise consultants, there is nothing to worry about. Franchise Genesis works closely with third-party experienced franchise attorneys who represent the franchisor. We ensure that everything from the franchise sale to acquiring federally registered trademarks or a United States patent is handled appropriately for each client.

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References & Additional Information

Federal Trade Commission. “Franchise Rule.” ftc.gov. https://www.ftc.gov/legal-library/browse/rules/franchise-rule.

Federal Trade Commission. “Franchise Rule Compliance Guide.” ftc.gov, May 2008, https://www.ftc.gov/system/files/documents/plain-language/bus70-franchise-rule-compliance-guide.pdf.

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Article reviewed on 12/14/2023 by:

Rick Robinson

CFE of Franchise Genesis

A franchise executive for almost 4 decades, Rick’s exhaustive experience includes being a Franchisor running 5 different brands (both start-ups and turnarounds) as well as owning a large multi-unit Master Franchise, with 230 franchisees doing $19 million in annual revenue. Rick is a recognized leader within the International Franchise Association earning their Certified Franchise Executive (CFE) and was elected and served on their prestigious Board of Directors with other top executives from some of the largest franchise brands in the world. Rick has been a guest speaker at six of the IFA’s Annual Conventions. He and his team have sold more than 1,000 Franchises for their customers.