Franchise Registration States and State Franchise Laws – part I

As start up franchise business owner you are probably already very well aware of your state franchising laws. On the other hand, if you are still working on your business and marketing strategy, and you are planning to expand nationwide, you will need to take into consideration the franchise laws in all of the states where you plan to expand. Moreover some states require that you register there even if you only plan to advertise your franchise on their territory.

There are 14 franchise registration states in The United States. They all have different franchise regulations. We have listed some of the key points in each state franchise laws and regulations. However it is strongly recommended that you consult a franchise attorney experienced in franchise law and registration procedures in each of the states where you plan to offer or sell franchise units.

US state franchise laws.

• California. According to California Franchise Investment Law and California Franchise Relations Act a franchise is the agreement between two parties, where one party gives the right to the other to use their trade name in exchange of a fee. In order to offer and sell franchises, you need to register your franchise. Visit the California Department of Corporations. There you can obtain all the legal forms and documents required. You will also need to pay a registration fee. You also need to know that every offer and sale you make must be registered with the Commissioner of Corporations. This is done with a Uniform Franchise registration Application. There are exemptions of this rule so you need to check with a lawyer about the specifics. If your business is dealing with automobiles, fuel, construction and beer, you will also need to comply with more industry specific regulations.
• Hawaii. Registration of franchises in the state of Hawaii is done through the Department of Commerce and Consumer Affairs. Similar to several other states, you will not be able to offer or sell franchises until you are registered at the state and until your disclosure agreement is approved.
• Illinois. As with the states discussed so far, offering and selling franchise units before you have registered your franchise business and have your disclosure documents approved is considered law offense. Franchise registration is done at Illinois Attorney’s General. According to state’s franchise regulations, franchise anniversary dates automatically expire 120 days after the end of the financial year. Moreover you no longer need to register your franchise brokers as you needed to do just several months ago. The registration of large franchises ($5,000,000 and $15,000,000) are processed faster and there is a $500 registration fee. Very large franchise (above 15 million) do not need to register, but they do need to provide their disclosure documents to prospective franchisees prior to signing the agreement.