Franchise Registration States and Filing Fees
There are three (3) primary franchise state registration types, which could change at any time, so please refer to each state’s current rules and regulations. The three primary types of franchise state registrations are as follows:
Non-Registration States = Just Need Franchise Disclosure Document (FDD)
Filing States = Just file and pay a fee; no additional approval
Franchise Registration States = Require filing, fee, and approval by state
Non-Registration States:
The following states do not require filing or registration to enable them to sell franchises in the state. They only require that the franchisor follow the FTC guidelines and have an approved Franchise Disclosure Document (FDD).
- Alaska
- Arizona
- Arkansas
- Colorado
- Delaware
- District of Columbia
- Georgia
- Idaho
- Iowa
- Kansas
- Louisiana
- Massachusetts
- Mississippi
- Missouri
- Montana
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Tennessee
- Vermont
- West Virginia
- Wyoming
Filing States:
A filing state is one that requires the franchisor to file and pay a fee but does not require the franchisor to submit documents and seek approval to sell franchises, like a registration state.
Connecticut is a franchise-filing state and has a franchise-filing fee of $400.
Florida is a franchise-filing state and has a franchise-filing fee of $100.
Kentucky is a franchise-filing state and has a franchise-filing fee of $0.
Maine is a franchise-filing state and has a franchise-filing fee of $25.
Nebraska is a franchise-filing state and has a franchise-filing fee of $100.
North Carolina is a franchise-filing state and has a franchise-filing fee of $250.
South Carolina is a franchise-filing state and has a franchise-filing fee of $100
Texas is a franchise-filing state and has a franchise-filing fee of $25.
Utah is a franchise-filing state and has a franchise-filing fee of $100.
Franchise Registration States:
These states require registration and approval of a Franchise Disclosure Document prior to selling in or from the state. These fees can and may change depending on the state regulations.
CALIFORNIA
Franchise Division Department of Corporations, 1515 K Street, Suite 200, Sacramento, CA 95814
Franchise Registration Fee California: $675
HAWAII
Commissioner of Securities Department of Commerce and Consumer Affairs Business Registration Division, Securities Compliance Branch, 335 Merchant Street, Room 203, Honolulu, HA 96813
Franchise Registration Fee Hawaii: $125
ILLINOIS
Franchise Division Office of Attorney General, 500 South Second Street, Springfield, IL 62701
Franchise Registration Fee Illinois: $500
INDIANA
Franchise Division Office of Secretary of State, 302 W. Washington St., Rm. E111, Indianapolis, IN 46204
Franchise Registration Fee Indiana: $500
MARYLAND
Office of the Attorney General Division of Securities, 200 St Paul Place, Baltimore, MD 21202-2020
Franchise Registration Fee Maryland: $500
MICHIGAN
Consumer Protection Division, Attn: Franchise Section, 525 W. Ottawa Street, Williams Building, 1st Floor, Lansing, MI 48933
Franchise Registration Fee Michigan: $250
MINNESOTA
Minnesota Department of Commerce Securities, Unit 85 7th Place East, Suite 280, St. Paul, MN 55101-2198
Franchise Registration Fee Minnesota: $400
NORTH DAKOTA
North Dakota Securities Department, 600 East Boulevard Ave., State Capital Fifth Floor, Dept. 414, Bismarck, ND 58505-0510
Franchise Registration Fee North Dakota: $250
NEW YORK
New York State Department of Law Investor Protection Bureau, 28 Liberty Street, 21st Floor, New York, NY 10005
Franchise Registration Fee New York: $750
RHODE ISLAND
Franchise Office Division of Securities John O. Pastore Office Complex, 1511 Pontiac Avenue, Bldg. 69-1, Cranston, RI 02910
Registration Fee Rhode Island: $500
SOUTH DAKOTA
Department of Labor and Regulation Division of Insurance Securities Regulation, 124 S. Euclid, Suite 104, Pierre, SD 57501
Registration Fee South Dakota: $250
VIRGINIA
State Corporation Commission Division of Securities and Retail Franchising, 1300 E. Main St., 9th Floor, Richmond, VA 23219
Registration Fee Virginia: $500
WASHINGTON STATE
Department of Financial Institutions Securities Division, 150 Israel Rd. SW, Tumwater, WA 98501
Registration Fee Washington: $600
WISCONSIN STATE
Department of Financial Institutions Division of Securities, 345 West Washington Ave., 4th Floor, Madison, WI 53703
Registration Fee Wisconsin: $400
Understanding the Role of Franchise Registration Laws By State
Franchise registration laws play a crucial role in augmenting the Federal Franchise Laws. Their primary purpose is to ensure that franchisors adhere to specific disclosure guidelines, promoting transparency and informed decision-making.
Enhancing Transparency
Franchise registration laws require franchisors to provide a Franchise Disclosure Document to potential franchisees. This document must be issued at least 14 days before:
- Signing any franchise agreement.
- Paying any associated fees.
This time frame ensures that prospective franchisees have ample time to review all necessary information before making a commitment.
Protecting Franchisees
By enforcing these rules, franchise registration laws protect potential franchisees from entering agreements without full understanding. The required disclosure involves detailed financial and operational data, enabling franchisees to evaluate the opportunity thoroughly.
In summary, these laws complement federal regulations by prioritizing transparency and safeguarding the interests of individuals considering franchise opportunities.
What Does the FDD Registration Process Entail?
The Franchise Disclosure Document registration process begins with submitting your FDD and franchise registration application to the appropriate state authorities. Here’s a step-by-step breakdown of what’s involved:
- Document Submission: First, you must prepare and submit your FDD, which includes crucial information about your franchise offering.
- Examination by State Officials: State examiners carefully review your FDD to ensure it meets the required legal and regulatory standards specific to that state.
- Financial Review: As part of the examination, your franchise company’s financial statements are assessed. This assessment helps determine your business’s financial viability and may lead to conditions being set for registration based on financial assurance measures.
- Conditional Approval: If your FDD satisfies all the regulatory criteria, the state grants you the permission to offer and sell franchises within their jurisdiction. Keep in mind that this approval does not guarantee the accuracy of the document’s disclosures—but rather confirms compliance with local laws.
Understanding these steps is crucial for successfully navigating the FDD registration process, ensuring you can expand your franchise within the target state.
State-Specific Trademark Requirements
If a franchisor lacks federally registered trademarks, they must consider additional filing requirements in specific states – specifically, Georgia and Louisiana mandate filings for franchisors under these circumstances. These requirements are essential for legal compliance and to operate effectively within these states.
Franchisors with a federally registered trademark need to be aware of specific states that mandate franchise filings. These filings, which differ from the more stringent Franchise Registration requirements, typically involve submitting a notice rather than a reviewed document. States that impose this requirement include:
- Connecticut
- Florida
- Kentucky
- Nebraska
- North Carolina
- South Carolina
- South Dakota
- Texas
- Utah
While these states require franchisors to complete a filing process, they do not conduct an in-depth examination or review of the Franchise Disclosure Document, unlike the Franchise Registration states.
During the Franchise Disclosure Document registration process, state examiners might impose several conditions to ensure compliance and financial stability:
- Financial Assurance Requirements: Examiners may require your franchise to meet specific financial criteria, such as maintaining certain liquidity levels or providing financial guarantees.
- Submission of Financial Statements: You could be asked to submit detailed financial statements for review to assess the financial health of your business.
- Audited Financial Reports: Some states might require audited financial reports to validate the accuracy of your financial information.
These measures are designed to protect potential franchisees and ensure their franchise is in a strong financial position to support its operations and growth.
FDD Registration by State
If your main trademarks as a franchisor aren’t registered with the United States Patent and Trademark Office (USPTO), there are certain states where you must register your Franchise Disclosure Document. These states include:
- Connecticut
- North Carolina
- South Carolina
- Maine
Ensuring your trademarks are duly registered can simplify the process, but if they’re not, attention to registration in these states is essential for compliance. Use this information to avoid unexpected hurdles in your franchising journey.
State regulators do not check the truthfulness of the details in a Franchise Disclosure Document. Instead, their role is to ensure that the FDD meets state regulatory standards. While they review the document’s compliance with these requirements, they don’t validate the factual accuracy of the disclosures themselves. It’s up to the potential franchisee to scrutinize the information provided and verify it independently.
Franchisors must provide prospective franchisees with the Franchise Disclosure Document at least 14 calendar days prior to the date of their signing a franchise agreement. This rule also applies if any initial fees are to be paid. The timeframe ensures that potential franchisees have adequate time to review all pertinent information presented by the franchisor. This requirement is part of the overall compliance with federal franchise laws designed to protect franchisee interests.
