Know State Requirements

Once registered in your home state, you should check out the requirements for other states because there may be some in which you will not choose to do business.

Some states have additional requirements for selling your franchise. There are registration states and non-registration states. A further subdivision is whether or not the states require inclusion of audited financial statements.

Legally, the Federal Trade Commission (FTC) DOES NOT require registration or the filing of the disclosure document in any of the non-registration states. You may want to concentrate your sales efforts on these states as your initial filing in your home state is sufficient.

Registration states require that the offering must first be approved and registered by the state before it can be promoted to prospective franchise buyers. This is in addition to your home state registration. These states include: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.

Certain states, such as Illinois and Minnesota, have even more stringent requirements for the franchisor. This supposedly affords better protection for the prospective franchisee, but is expensive for the franchisor.

Your lawyer will have a current and complete listing of filing requirements by state.