As you know, the Federal Trade Commission regulates the Franchise industry.  The required set of disclosures required by the FTC to offer the sale of Franchises are collectively known as the “UFOC” and these Federal guidelines were last revised May 07.  Once the UFOC has been drafted and reviewed by a Franchise attorney, then you must register it in the different States you wish to offer Franchises.  Offering the sale of Franchises without registering the UFOC is illegal and will result in much grief including fines, litigation and sanctions.

Most states are painless when it comes to registering your UFOC- we will call those Non-registration states.  In these States it may as simple as complying with their business opportunity laws, sending in a fee along with your UFOC and you’re done.   There are fourteen States that take a stricter approach to approving Franchises.  This simply means that the documents are further scrutinized in an attempt to protect the buyer and prevent fraud.  We will refer to these states as Registration States and they are listed below:

California

Hawaii

Illinois

Indiana

Maryland

Michigan

Minnesota

New York

North Dakota

South Dakota

Rhode Island

Virginia

Washington

Wisconsin

          This does not mean that you should avoid registering your Franchise in these States.  In fact, if the UFOC is written properly with the correct provisions- there is rarely a problem.  I always recommended that you limit where you register at first.  Depending on your circumstances, it is always best to stay within your surrounding States for the first year of Franchising to maintain control and ensure that your first six Franchisees succeed.

          Clients who use our services are provided with various resources, which include an extensive list of registration requirements for each State as well as the most recent FTC guidelines for the UFOC documents.