When you look into franchising your business, needless to say, you will find that there are A LOT of details to the franchising process. There is tons of information (and misinformation) about franchising on the Internet making it easy to get overwhelmed. And then you read somewhere that as a franchisor, I will need to register my franchise in every state before I can sell ANY franchises. We are here to tell you that when it comes to franchise registration, it is a myth that you must register your franchise in every state before you can sell any franchises. Myth busted!
What is Franchise Registration?
Registration is part of franchising, but it is really nothing to worry about! First, let’s discuss a bit more about what franchise registration really means (read about the steps it takes to franchise your business including registration). The act of registering a franchise starts with a Franchise Disclosure Document (FDD) that has been prepared according to the Federal Trade Commission (FTC) guidelines and, by law, this document must be given to each qualified franchise applicant for him/her to review before you can award the applicant a franchise (learn more about what is the Franchise Disclosure Document and what’s in it). Bottom line is your Franchise Disclosure Document may or may not need to be registered, depending on your “home state”…in other words, where you are currently operating your business.
While franchising is federally regulated, a small number of states handle the registration of the Franchise Disclosure Document independently. Of the 50 states, there are 36 states that are “Non-Registration” states, which mean that once you have an approved Franchise Disclosure Document, you do not need to do anything else and can immediately start offering franchises in those states. The remaining 14 states are referred to as “Registration States” (to see a list of these states read “Franchise Registration: Some States are Tougher”). This simply means that the Franchise Disclosure Document must be approved in each of these states before you can offer or sell franchises in that state.
“So What Exactly Does This Mean for Me?”
Let’s say that your business is located in Arizona and that is your home state. Arizona is known as a Non-Registration state. Once we build your entire franchise structure, create the necessary documents, and send it all over to one of its franchise attorneys to review and approve. Then you are good to immediately start awarding franchises (learn about how you can “Market and Sell Franchises Yourself”). You can award franchises, not only in your home state (Arizona), but in all other Non-Registration states as well! Remember there are 36 Non-Registration states all together. You can now say you are franchising nationwide!
On the other hand, let’s say your business is located in New York (or any of the other 14 Registration States), then there is one more step before you are done. After your Franchise Disclosure Documents have been reviewed by one of our franchise attorneys, the next step is for everything to be filed with the State of New York. We manage this whole process (which can take as little as a couple weeks or longer depending on how quick the state examiner moves) ensuring that both the franchise attorney and the state examiner’s questions, if any, are addressed immediately. Once your state (in this example New York) grants permission and your franchise offering is approved then you can start awarding franchises in your home state, as well as the 36 Non-Registration states!
Do I Have Anything to Worry About?
Nope. Keep in mind we create everything from scratch (you are not asked to fill out a questionnaire and templates are not used), and regardless of your home state, we put everything together to meet the stringent guidelines of the tough Registration States. We pride ourselves in the fact that we have had a 100% success rate getting our clients approved in all the Registration States. To learn more about franchise registration states and our franchise development program you can call us directly at 1-877-615-5177 or simply send us your information. We will answer ALL of your questions about franchising your business.
