Legal Tools
Ongoing Legal Compliance
for your Franchise Explained
by Julie Lusthaus
Your franchise has launched, and you are actively marketing and selling to franchisees in compliance with all applicable laws. There is no more need for legal advice or so you think. However, under federal and state franchise laws, there are ongoing registration and filing obligations. These include the following: Annual Franchise Disclosure Document (FDD) Updates
32 The Franchise Woman
Federal law requires that the FDD be updated annually within 120 days after the franchisor’s fiscal year end. In addition, some states have their own FDD update deadlines. If you offer franchises in those states, you must comply with both federal and state law. Franchisors should stop using their existing FDD by the 120th day after the end of their fiscal year and
prior to the expiration of the registration in any state with a different update deadline. Generally, once the new FDD is issued, franchisors should assume they need to provide the new FDD to prospects who received the old document but did not purchase before updating the FDD. They must also wait the required waiting period after providing the FDD before closing the sale.Â
