New York Franchise Law Blog : Franchise Lawyer & Attorney Charles N. Internicola, Providing National Representation of Franchisees and Franchisors

In the State of New Jersey any determination as to the existence or non-existence of a franchise relationship requires a a factual evaluation of the legal rights and obligations between the parties.

What Constitutes a Franchise in New Jersey?

The parameters and factors to be evaluated are defined and proscribed by the New Jersey Franchise Practices Act, N.J.S.A. 56:10-3(a), which defines a "franchise" and "franchise relationship" as one  requiring:

a written agreement for a definite or indefinite period, in which a person grants to another person a license to use a trade name, trademark, service mark, or related characteristics, an in which there is a community of interest in the marketing of goods or services at wholesale, retail, by lease, agreement or otherwise.

Based on New Jersey's definition of a franchise, franchise relationships in the State of New Jersey are characterized by (a) a written agreement, (b) a trademark license, and (c) a community of interest in the marketing of goods or services.  Factors (a) and (b) are relatively self-explanatory.  As to factor (c), a "community of interest", typically exists, where the presumptive "franchisor" / party granting the trademark license, maintains control to direct and/or influence the potential franchisees marketing and business activities.  

Why Should you Care?

If your business relationship qualifies as a franchise your legal obligations and rights will exist subject to the mandates of, among other things, the New Jersey Franchise Practices Act.  That is, your relationship as "franchisor and franchisee" will not only be governed by the terms of your written agreement but also by the statutory requirements set forth in the New Jersey Franchise Practices Act.  Examples of some statutory mandates that will be imposed on your business relationship include restrictions limiting a "franchisors" ability to terminate a franchise without "good cause" and restrictions prohibiting a franchisor from imposing  unreasonable performance requirements on its franchisees.

If you are a manufacturer or distributor with "licensed" retail outlets you must be on guard that your distribution /  licensing agreement - depending on its terms - may impose and subject your business to franchise regulation and restrictions.  if you are an independent "distributor / licensee" who sells or distributes product or services - if you qualify as a franchisee  - you may have more legal protections than you realize. 

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 An obvious topic of interest to any franchisor is how much money can be made by operating its business. A smart franchisor will recognize its suppliers as an important source of revenue that can contribute directly to the franchisor’s bottom line. Recently, I discussed the law applicable to supplier payments with Kenneth A. Goss, Esq., Senior Counsel for a leading franchise system. The following is Mr. Goss' guest post on this important topic:

Franchisors can, and often do, enjoy the fruits of an effective supply program by receiving payments from suppliers based on the goods and services purchased by the franchise system. Payments from suppliers, which can be a significant source of revenue for a franchisor, are generally regarded by regulators and the courts as an established franchise industry practice based on the contractual rights each franchisor reserves in its franchise agreement. However, franchisors should be mindful that plaintiffs’ counsel in franchise litigation cases often look to exploit any weakness in a supplier payment program arguing that the franchisor has unfairly benefited from payments at the franchisees’ expense. The lesson to take away is that a well-structured supply program can ensure that a franchisor obtains maximum revenue from suppliers while minimizing the potential risk from franchisee claims.

Franchisors realize revenue from suppliers in many ways. Federal regulations recognize that payments from suppliers include all revenue and other material consideration, whether direct or indirect, that franchisors receive from suppliers based on purchases by franchisees. Direct payments may take the form of an ongoing rebate, an ongoing marketing allowance or an up-front contract signing bonus. Additionally, franchisors may receive indirect payments, for example, when a supplier sells a certain good or service to units owned by the franchisor at a lower price than the supplier sells the same good or service to units owned by franchisees. In the case of an indirect payment, the franchisor is deemed to have received the cash value of the discount or other benefit to the franchisor. Simply put, a payment from a supplier is the value the franchisor receives for allowing a supplier to participate in the franchise system’s restrictive sourcing program.

Federal trade commission regulations governing the offer and sale of franchises are concerned primarily with imposing upon franchisors the obligation to disclose payments from suppliers in the franchisor’s disclosure document. Specifically, federal regulations state that each franchise disclosure document should disclose whether the franchisor or any of its affiliates have the right to receive payments from suppliers and, if so, require franchisors to further disclose: (a) the precise basis by which the franchisor or its affiliate derives such revenue; and (b) the total revenue, either as a flat dollar amount or percentage of the franchisor’s total revenue, that the franchisor and its affiliates receive from the purchase and lease of required products and services by franchisees. Franchisors must also disclose the identity of suppliers that contribute to the franchisor’s advertising fund in each case where the franchisor collects payments from a supplier for that purpose. As long as a franchisor complies with its disclosure obligations under federal regulations, the franchisor is largely free to enter into whatever payment relationships with a supplier it wants.

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Arkansas Franchise Practices Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Arkansas Department of Finance and Administration
 

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
California Franchise Investment Law. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
California Department of Corporations

Useful Links:
California Department of Corporations, the California Franchise Tax Board and the California Seller Assisted Marketing Plan

California Statutes that Apply to Franchising:

Statute 31000 – 31019 - Definitions

Statute 31100 – 31109.1 - Exemptions

Statute 31110 – 31125 - Disclosure

Statute 31150 – 31157 – General Provisions

Statute 31200 – 31204 – Fraudulent Practices

Statute 31210 – 31211 – Prohibited Practices

Statute 31220 – Unfair Practices

Statute 31300 – 31360 – Civil Liability

Statute 31400 – 31408 – Powers of the Commissioner

Statute 31410 – 31412 – Crimes

Statute 31420 – Service of Process

Statue 31500 – 51506 - Administration

Statue 31510 – 51516 – General Provisions

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Colorado Department of Revenue

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Registration Status:
Franchise Filing State

Relevant State Franchise Law(s):
Connecticut Franchise Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Connecticut Department of Revenue Services and Connecticut Business Opportunity Investment Act

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Delaware Franchise Securities Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Delaware Division of Corporations

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
District of Columbia Office of Tax and Revenue

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Registration Status:
Franchise Filing State

Relevant State Franchise Law(s):
The Florida Franchise Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:

Not Applicable

Useful Links:
Florida Department of Revenue

Florida Franchise Act:
Statute 686.201 - Sales representative contracts involving commissions; requirements; termination of agreement; civil remedies;

Statute 686.30 - Contract agreements for repair parts fro motor vehicles and trucks; termination must be done in good faith; definition of good cause; prohibited practices; failure to pay sum specified on cancellation of contract; liability

Statute 686.40 - Agricultural Equipment Manufacturers and Dealers Act

Statute 686.401 - Legislative finding and intent; construction of ss. 686.40-686.418

Statute 686.402 - Definitions of terms used in ss. 686.40-686.418

Statute 686.403 - Application of ss. 686.40-686.418

Statute 686.405 - Warranty agreements; claims; compensation of dealers

Statute 686.406 - Parts; availability; return

Statute 686.407 - Repurchase of inventory upon termination of franchise agreement; establishment
or relocation of dealership; sale or lease of new equipment

Statute 686.408 - Repurchase of inventory upon death or incapacity of dealer

Statute 686-409 - Compensation for inventory upon refusal to renew, termination of, or restriction on transfer of a franchise

Statute 686-41 - Indemnification of dealer with respect to legal actions

Statute 686.413 - Unlawful acts and practices

Statute 686.415 - Unenforceable contract or franchise agreement

Statute 686.417 - Remedies

Statute 686.418 - Effect of act on other remedies
 

Statute 686.501 - Definitions; ss. 686.501-686.506

Statute 686.502 - Cosignment relationship; notice; proceeds of sales held in trust; contract requirements

Statute 686.503 - Contract provisions

Statute 686.504 - Warranties by art dealers; written statement; terminology

Statute 686.505 - Construction of language

Statute 686.506 - Rights and liabilities, additional; merchant's liability

Statute 686.60 - Short title

Statute 686.601 - Legislative finding and intent; construction

Statute 686.602 - Definitions of terms used in ss. 686.601 - 686.614

Statute 686.603 - Application

Statute 686.604 - Warranty agreements; claims; compensation of dealers

Statute 686.605 - Parts; availability; return

Statute 686.606 - Repurchase of inventory upon termination of dealer agreement

Statute 686.607 - Repurchase of inventory upon dealth or incapacity of dealer;

Statute 686.608 - Compensation for inventory upon refusal to renew, ermination of, or restriction on transfer of a dealr agreement

Statute 686.609 - Idemnification of dealer with respect to legal actions

Statute 686.611 - Unlawful acts and practices

Statute 686.612 - Unenforceable contract or agreement

Statute 686.613 - Remedies

Statute 686.614 - Effect on act on other remedies

Statute 686.701 - Reimbursement of federal excise tax on motor fuel
 

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
Indiana Franchise Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Indiana Securities Division

Useful Links:
Indiana Business Opportunity Transactions, Indiana Taxes & Finance and Indiana Securities Division

Statutes from the Indiana Franchise Act

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Iowa Franchise Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Iowa Department of Revenue

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
New York Franchise Sales Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
New York Attorney General

Useful Links:
New York Attorney General and New York State Department of Taxation and Finance

Relevant Franchise Statutes in New York:

Statute 680 - Legislative Findings and Declaration of Policy

Statute 681 - Definitions

Statute 682 - Scope

Statute 683 - Disclosure Requirements

Statute 684 - Exceptions

Statute 685 - Escrow and Impoundments

Statute 686 - Designation of Secretary of State as Agent for Service of Process; Service of Process

Statute 687 - Fraudulent and Unlawful Practices

Statute 688 - Investigations

Statute 689 - Action by the Department of Law

Statute 690 - Violations and Penalties

Statute 691 - Civil Remedies

Statute 692 - Enforcement by Attorney General

Statute 693 - Immunity

Statute 694 - Administration

Statute 695 - Separability Clause; Construction

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Registration Status:
Franchise Filing State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
North Carolina Department of Revenue

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
North Dakota Franchise Investment Law. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
North Dakota Securities Department

Useful Links:
North Dakota Securities Department and the North Dakota State Tax Commissioner

Relevant Franchise Statutes in North Dakota:

Statutes from the North Dakota Franchise Investment Law

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Ohio Department of Taxation

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Oklahoma Business Opportunity Sales Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Oklahoma Tax Commission

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Registration Status:
Franchise Regulation State (no filing)

Relevant State Franchise Law(s):
Oregon Revised Statute for Franchises and Oregon Administrative Rules for Franchises. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Oregon Finance & Corporate Securities Division

Useful Links:
Oregon Division of Finance and Corporate Securities

Relevant Franchising Statutes and Rules in Oklahoma:

ORS Chapter 650 – Oregon Revised Statutes for Franchises

OAR Chapter 441, Div. 325 - Oregon Administrative Rules for Franchises

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Pennsylvania Department of Revenue

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
Rhode Island Franchise Investment Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Rhode Island Department of Business Regulation Securities Division

Useful Links:
State of Rhode Island Department of Business Regulation and the Rhode Island Division of Taxation

Relevant Franchise Statutes in Rhode Island:

Statute 19-28.1-1 – Short Title

Statute 19-28.1-2 – Legislative Intent

Statute 19-28.1-3 - Definitions

Statute 19-28.1-4 – Scope and Applicability

Statute 19-28.1-5 – Registration of Franchises

Statute 19-28.1-6 – Exemption from Registration

Statute 19-28.1-7 – Out of State Exemption

Statute 19-28.1-8 – Delivery Requirements

Statute 19-28.1-9 – General Registration Provisions

Statute 19-28.1-10 – Negotiated Changes Permitted

Statute 19-28.1-11 – Change in Information

Statute 19-28.1-12 - Advertising

Statute 19-28.1-13 – Books and Records

Statute 19-28.1-14 – Jurisdiction and Venue

Statute 19-28.1-15 – Waivers Void

Statute 19-28.1-16 – Franchisee’s Right to Associate

Statute 19-28.1-17 – Fraudulent, Deceptive and Prohibited Practices

Statute 19-28.1-18 - Enforcement

Statute 19-28.1-19 – Summary Action

Statute 19-28.1-20 – Criminal Prosecution

Statute 19-28.1-21 – Private Civil Actions

Statute 19-28.1-22 – Period of Limitation

Statute 19-28.1-23 – No Other Civil Liability

Statute 19-28.1-24 – Burden of Proof

Statute 19-28.1-25 – Hearings and Judicial Review

Statute 19-28.1-26 – Power of Director

Statute 19-28.1-27 – Rules, Orders, Forms and Interpretive Opinions

Statute 19-28.1-28 – Service of Process

Statute 19-28.1-29 – Fees

Statute 19-28.1-30 -  Appropriation

Statute 19-28.1-31 – Cooperation with Other Agencies or Organizations

Statute 19-28.1-32 – Filing of Documents

Statute 19-28.1-33 – Construction

Statute 19-28.1-34 – Severability  

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Registration Status:
Franchise Filing State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
North Carolina Business Opportunity Sales and North Carolina Department of Revenue

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
South Dakota Franchise Investment Law. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
South Dakota Securities Division

Useful Links:
South Dakota Securities Division and the South Dakota Department of Revenue & Regulation

Statutes relevant to South Dakota franchise law:

Statute 37-5B-1 - Definitions

Statute 37-5B-2 - Jurisdiction

Statute 37-5B-3 – Offer or Sale Not Made in State

Statute 37-5B-4 – Notice Filing Required

Statute 37-5B-5 – Notice Filing Provisions

Statute 37-5B-6 – Amendments

Statute 37-5B-7 – Updating Disclosure Documents

Statute 37-5B-8 – Start-up Financial Statements

Statute 37-5B-9 – Phase-in of Financial Statements

Statute 37-5B-10 – Negotiation of Terms

Statute 37-5B-11 – Signed Receipt

Statute 37-5B-12 – Exemption from Chapter

Statute 37-5B-13 – Exemption from Notice Filing and Objections to Deliver Disclosure Document

Statute 37-5B-14 – Exemption from Notice Filing

Statute 37-5B-15 – Exemptions by Director

Statute 37-5B-16 – Thresholds

Statute 37-5B-17 – Delivery of Disclosure Document

Statute 37-5B-18 – Time of Delivery of Disclosure Document

Statute 37-5B-19 – Books and Records

Statute 37-5B-20 – Burden of Proof

Statute 37-5B-21 - Arbitration

Statute 37-5B-22 – Consent to Service of Process

Statute 37-5B-23 – Advertisement

Statute 37-5B-24 – Fraud – Class 4 Felony

Statute 37-5B-25 – Fraud – Class 6 Felony

Statute 37-5B-26 – Prohibited Practices

Statute 37-5B-27 – Director Approval Not Permitted

Statute 37-5B-28 – Administration

Statute 37-5B-29 – Promulgation of Rules

Statute 37-5B-30 – Opinions

Statute 37-5B-31 – Filed Documents

Statute 37-5B-32 – Records of Filings and Orders

Statute 37-5B-33 – Public and Nonpublic Records

Statute 37-5B-34 – Copies of notice Filings and Orders

Statute 37-5B-35 – Investigations

Statute 37-5B-36 – Request for Information

Statute 37-5B-37 – Subpoena Powers

Statute 37-5B-38 – Immunity

Statute 37-5B-39 – Unauthorized Use of Information – Misdemeanor

Statute 37-5B-40 – Cooperation with Other Agencies

Statute 37-5B-41 – Cease and Desist Orders

Statute 37-5B-42 – Order to Show Cause

Statute 37-5B-43 – Civil Penalty

Statute 37-5B-44 – Order or Request for Hearing

Statute 37-5B-45 – Effect of Order Without Hearing

Statute 37-5B-46 – Affirmance, Modification, or Vacation of Order

Statute 37-5B-47 – Civil Action by Attorney General

Statute 37-5B-48 – Injunctive Relief

Statute 37-5B-49 – Civil Damages or Rescission

Statute 37-5B-50 – Limitation of Actions

Statute 37-5B-51 – Pending Actions and Actions Based on Prior Conduct

Statute 37-5B-52 – Prior Registrations and Rulings

Statute 37-5B-52 – Prior Offers and Sales

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Tennessee Franchise Disclosure Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Tennessee Department of Revenue

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Registration Status:
Franchise Filing State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Texas Business Opportunity Disclosure Law and Texas Comptroller Office

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Registration Status:
Franchise Filing State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Utah Business Opportunity Disclosure Act and Utah State Tax Commission

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Registration State:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Vermont Department of Taxes

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
Code of Virginia – Securities Act, Code of Virginia – Franchising Act, of and Code Virginia Trademarks & Servicemarks Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Virginia Division of Securities & Retail Franchising

Useful Links:
Commonwealth of Virginia State Corporation Commission and the Virginia Department of Taxation

Statutes relevant to Virginia franchise law:

Virginia Securities Act:

Statute 13.1-501 – Definitions

Statute 13.1-502 – Unlawful Offers and Sales

Statute 13.1-503 – Unlawful Advice

Statute 13.1-504 –Registration

Statute 13.1-504.1 – Brokerage Services of Savings and Loan Associations, Savings Banks or Service Corporations of Either; When Registration Not Required

Statute 13.1-504.2 – Broker-dealer Services Provided by Credit Unions; When Registration Not Required

Statute 13.1-505 – Procedure for Registration

Statute 13.1-505.1 – Post-registration Provisions

Statute 13.1-506 – Revocation of Registration

Statute 13.1-507 – Registration Requirement; Exemptions

Statute 13.1-508 – Registration by Notification

Statute 13.1-509 – Registration by Coordination

Statute 13.1-510 – Registration by Qualification

Statute 13.1-511 – Effectiveness and Reports

Statute 13.1-512 – Repealed Act (Description Unavailable)

Statute 13.1-513 – Stop Orders

Statute 13.1-514 – Exemptions

Statute 13.1-514.1 – Exemption of Certain Securities by Order of Commission

Statute 13.1-514.2 – Primacy of Virginia Law to be Maintained

Statute 13.1-515 – Advertising

Statute 13.1-516 – Misleading Filing

Statute 13.1-517 – Consent to Service of Process

Statute 13.1-518 – Investigations; Confidentiality of Information and Documents

Statute 13.1-518.1 – Broker-dealers and Investment Advisors to File Certain Reports with Commission

Statute 13.1-519 – Injunctions

Statute 13.1-520 – Crimes

Statute 13.1-520.1 – Commission May Transmit Record or Complaint to Locality Where Violation Occurred

Statute 13.1-521 – Violations Punishable by the Commission

Statute 13.1-522 – Civil Liabilities

Statute 13.1-523 – Rules and Forms

Statute 13.1-523.1 – Commission Authority to Regulate Securities and Investment Advisory Activities

Statute 13.1-524 – Certain Records of Commission Available to Public; Admissibility of Copies; Destruction

Statute 13.1-525 – Official Interpretations

Statute 13.1-525.1 – Fees to Cover Expense of Regulation

Statute 13.1-526 – Transition

Statute 13.1 527 – Short Title

Statute 13.1-527.01 – Severability Clause

Statute 13.1-527.1 – Division Created; Duties

Statute 13.1-527.2 – Attorneys, Employees and Consultants

Statute 13.1-527.3 – Commission to Provide Technical Assistance

Virginia Retail Franchising Act:

Statute 13.1-557 – Short Title

Statute 13.1-558 – Policy of the Commonwealth

Statute 13.1-559 – Definitions; Applicability of Chapter

Statute 13.1-560 – Registration Required

Statute 13.1-561 – Procedure for Registration; Bond; Renewal; Fee

Statute 13.1-561.1 – Fees to Cover Expense of Regulation

 Statute 13.1-562 – Revocation of or Refusal to Renew Registration

Statute 13.1-563 – Unlawful Offers

Statute 13.1-564 – Unlawful Cancellation of Franchise; Undue Influence

Statute 13.1-565 – Voidable Franchises

Statute 13.1-566 – Service of Process on Nonresident Franchisor

Statute 13.1-567 – Investigations; Confidentiality of Information and Documents

Statute 13.1-568 – Injunctions

Statute 13.1-569 – Crimes

Statute 13.1-569.1 – Commission May Transmit Record or Complaint to Locality Where Violation Occurred

Statute 13.1-570 – Violations Punishable by Commission

Statute 13.1-571 – Civil Remedies

Statute 13.1-572 – Rules and Forms

Statute 13.1-573 – Certain Records of Commission Available to Public; Admissibility of Copies; Destruction

Statute 13.1-574 – Effective Date

Virginia Retail Franchise Act Rules:

Statute 21VAC5-110-10 - Definitions

Statute 21VAC5-110-20 – Preliminary Statement

Statute 21VAC5-110-30 – Registration Application; Documents to File; Interim Financial Statements

Statute 21VAC5-110-40 – Pre-effective and Post-effective Amendments to the Registration

Statute 21VAC5-110-50 – Expiration; Application to Renew the Registration; Interim Financial Statements

Statute 21VAC5-110-55 – The Franchise Disclosure Document

Statute 21VAC5-110-60 – Automatic Effectiveness (Optional)

Statute 21VAC5-110-65 – Escrow and Deferral

Statute 21VAC5-110-70 – Consent to Service of Process

Statute 21VAC5-110-75 – Exemptions

Statute 21VAC5-110-80 – General Requirements for Preparation of Disclosure Documents; Master Franchises; Electronic Disclosure

Statute 21VAC5-110-85 – Disclosure of Confidential Information

Statute 21VAC5-110-90 – Repealed Franchise Law

Statute 21VAC5-110-95 – Requirements for Franchise Disclosure Document Preparation

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
Washington Franchise Investment Protection Act. Also refer to the FTC Franchise Rule.

Relevant Registration Entity:
Washington State Department of Financial Institutions

Useful Links:
Washington State Department of Financial Institutions and Washington State Department of Revenue

Statutes relevant to Washington franchise law:

Washington Franchise Investment Protection Act

Statute 19.100.010 RCW – Definitions

Statute 19.100.020 RCW – Unlawful in Certain Instances to Sell or Offer to Sell Franchise if Unregistered or Not Exempt

Statute 19.100.030 RCW – Exemptions from Registration Requirements

Statute 19.100.040 RCW – Registration of Franchise Brokers Required

Statute 19.100.050 RCW – Escrow or Impoundment of Franchise Fees as Registration Condition – Rules or Orders – Procedure to Rescind

Statute 19.100.060 RCW – Registration Statement – Effective, When 

Statute 19.100.070 RCW Registration – Claim of Exemption Filing – Duration – Renewal – Supplemental Report

Statute 19.100.080 RCW – Delivery of Offering Circular and Amendments Required

Statute 19.100.090 RCW – Filings, Registration, or Finding of Director – Construction

Statute 19.100.100 RCW – Advertisements – Copy to be Filed

Statute 19.100.110 RCW – Advertisements – False or Misleading – Notice – Procedure

Statute 19.100.120 RCW – Registration Statement – Stop Order - Grounds

Statute 19.100.130 RCW – Registration Statement – Stop Order – Notice – Hearing – Modification or Vacation of Order

Statute 19.100.140 RCW – Registration of Franchise Brokers Required

Statute 19.100.150 RCW – Records and Accounts – Reports

Statute 19.100.160 RCW – Application of Chapter – Jurisdiction – Service of Process - Consent

Statute 19.100.170 RCW - Violations

Statute 19.100.180 RCW – Relation Between Franchisor and Franchisee – Rights and Prohibitions

Statute 19.100.184 RCW – Terms and Conditions from Negotiations Initiated by Franchisee

Statute 19.100.190 RCW – Unfair or Deceptive Acts – Suits for Damages – Violations of Other Acts, Use in Evidence

Statute 19.100.200 RCW – Pendency of Other Proceedings Tolls Limitation of Action

Statute 19.100.210 RCW – Violations – Injunctions – Assurance of Discontinuance – Civil and Criminal Penalties – Chapter Nonexclusive

Statute 19.100.220 RCW -  Exceptions or Exemptions – Burden of Proof – Waivers of Compliance Void – Settlement Release or Waiver – Chapter as Fundamental Policy

Statute 19.100.230 RCW – Referral of Evidence to Attorney General or Prosecuting Attorney

Statute 19.100.240 RCW – Fees

Statute 19.100.242 RCW – Investigations by Director

Statute 19.100.245 RCW – Investigatory Powers – Proceedings for Contempt

Statute 19.100.248 RCW – Cease and Desist Orders

Statute 19.100.250 RCW – Powers of Director as to Rules, Forms, Orders and Defining Terms – Interpretive Opinions

Statute 19.100.252 RCW – Denial, Suspension, or Revocation of Franchise Broker by Director

Statute 19.100.255 RCW – Denial, Suspension, or Revocation of Exemption by Director

Statute 19.100.260 RCW – Applicability of Administrative Procedure Act

Statute 19.100.270 RCW – Administrator of Securities

Statute 19.100.900 RCW – Chapter Applicable to Existing and Future Franchises and Contracts

Statute 19.100.910 RCW – Chapter Cumulative and Nonexclusive

Statute 19.100.920 RCW – Effective Date – 1971 ex.s c252

Statute 19.100.930 RCW – Severability – 1971 ex.s. c 252

Statute 19.100.931 RCW – Severability – 1972 ex.s. c 116

Statute 19.100.932 RCW – Severability – 1979 ex.s. c 13

Statute 19.100.940 RCW – Short Title  

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
West Virginia State Tax Department

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Registration Status:
Franchise Registration State

Relevant State Franchise Law(s):
Wisconsin Franchise Investment Law. Also refer to the FTC Franchise Rule. 

Relevant Registration Entity:
State of Wisconsin Department of Financial Institutions

Useful Links:
State of Wisconsin Department of Financial Institutions and Wisconsin Department of Revenue

Statutes relevant to Wisconsin franchise law:

Statute 553.01 - Titles and Definitions: Short Title

Statute 553.02 - Titles and Definitions: Definitions

Statute 53.21 - Registration of Franchises: Registration Requirement

Statute 553.22 - Registration of Franchises: Excluded Franchises

Statute 553.23 - Registration of Franchises: Private Franchisee and Subfranchisor Sales Exempted

Statute 553.235 - Registration of Franchises: Experienced Franchisee Exempt Transactions

Statute 553.24 - Registration of Franchises: Exemption Proceedings

Statute 553.25 - Registration of Franchises: Exemption by Division

Statute 553.26 - Registration of Franchises: Registration by Notification

Statute 553.27 - Registration of Franchises: General Registration Provisions; Offering Circulars; Consent to Service of Process

Statute 553.28 - Registration of Franchises: Denial, Suspension and Revocation of Registrations

Statute 553.31 - Registration of Franchises: Amendment to Franchise Registration Statement

Statute 553.41 - Fraudulent and Prohibited Practices

Statute 553.51 - Enforcement and General Provisions: Civil Liability; Sale in Violation

Statute 553.52 - Enforcement and General Provisions: Criminal Penalties

Statute 553.54 - Enforcement and General Provisions: Injunctions

Statute 553.55 - Enforcement and General Provisions: Investigation and Subpoenas

Statute 553.56 - Enforcement and General Provision: Enforcement and Judicial Review

Statute 553.57 - Enforcement and General Provision: Enforcement of Criminal Penalties

Statute 553.58 - Enforcement and General Provision: Rules, Forms and Orders

Statute 553.59 - Enforcement and General Provision: Scope of Chapter

Statute 553.60 - Enforcement and General Provision: Miscellaneous Powers

Statute 553.605 - Enforcement and General Provision: Administrative Assessments; Investor Education

Statute 553.71 - Administration: Administration

Statute 553.72 - Administration: Fees and Expenses

Statute 553.73 - Administration: Service of Process

Statute 553.74 - Administration: Open Records; Publication

Statute 553.75 - Administration: Administrative Files and Opinions

Statute 553.76 - Administration: Waiver or Compliance Void

Statute 553.78 - Administration: Preemption

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Registration Status:
Non-Registration State

Relevant State Franchise Law(s):
Not Applicable. Refer to the FTC Franchise Rule.

Relevant Registration Entity:
Not Applicable

Useful Links:
Wyoming Department of Revenue

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If you are a successful business owner and entrepreneur, chances are that you have considered or, at least, thought about expanding your business through the establishment of a franchise system. That is, taking the trademark(s), services and business systems that you have created and licensing them to third parties (franchisees) who will then devote their own time and capital to expanding your business concept and, hopefully, benefit from the experience and success that you have achieved to date.  No doubt, franchising is a popular and extraordinary vehicle (when done correctly) to achieve the multi-unit expansion of a business.  However, the franchising is not right for every business or entrepreneur.  Before "starting a franchise", consider the following 4 questions to evaluate if franchising is right for your business:

• Franchise Question No. 1 - "Do you have Business Systems?"  

Franchising is all about duplication, consistency and uniformity.  That is, recreating, in each store / each franchisee's business, the unique qualities and customer experience that has made your business a success.  To recreate this success and franchise your business you cannot leave anything to chance and you must be able to identify, articulate, teach and recreate the "business systems" that "you" use to successfully operate your business. For example, the "business systems" that I am referring to will include your methods and procedures for (a) operating the business, (b) addressing and responding to customers/clients, (c) advertising, (d) preparing products or delivering services, (e) managing staff and (f) administration.  There are more and these "systems" will vary from business to business.  The good thing is that, as a successful business owner, deep down if you take an objective look at the things you do every day in operating your business, identifying your "systems" should be a straight forward task. But keep in mind that you must be able to quantify these systems (i.e., write them down), simplify them and teach them to your future franchisees.

• Franchise Question No. 2 - "Can your Systems be Taught to Franchisees?"

Once you have identified your "systems" (See, Franchise Question No. 1) the next question is whether or not your "systems" may be taught to franchisees and carried out by them consistently on a day-to-day basis.  Consistency is key and to establish a successful franchise your "systems" must be capable of duplication by your franchisees - to do this, your systems cannot be complex and must be "boiled down" to a set formula.  If your business "systems" are extremely complex (a) your business may not be an appropriate model for franchising or (b) your franchise may require extremely experienced franchisees with industry experience similar to yours. 

• Franchise Question No. 3 - "Do you Have a Strong and Protectable Trademark?"

One of the primary and core elements of a franchise and franchise system is its trademark(s). As a "franchisor" one of the primary assets that you will be licensing to your "franchisee(s)" is the right to use your Trademark(s).  So you need to make sure that your trademarks are unique to your business and be capable of obtaining legal protection - that is your trademark cannot be a generic term, cannot be a name that is currently used by others and must be capable of registration with the United States Patent and Trademark Office. For a more detailed discussion of the importance of trademarks to a franchise, check out "Trademarks Matter: Evaluate your Trademarks Often and Early Before Starting a Franchise."

• Franchise Question No. 4 - "Will your Business be Profitable for Franchisees?"

Right now I am certain that you can pinpoint the profits of "your business" on a monthly, if not weekly or daily basis.  To franchise your business you must first ensure that (a) your own business possesses a consistent track record of profitability and growth and (b) that your franchisees (if they follow your "systems") will possess the opportunity for profitable growth. When making this "profitability analysis", unlike your own business, you must take into account (i) the royalties that the franchisee will be paying to you on a weekly or monthly basis, (ii) the fact that the franchisee may have higher operating costs than your established business, and (iii) the franchisee may be servicing debt obligations used to establish its business.

For additional and insightful information on this topic check out Demir Barlas' article "How to Franchise Your Small Business" and Joel Libava's article "Does it Shout "Franchise Me!"?".  For a franchisees perspective as to what makes a good franchise system Sean Kelly's article "10 Criteria for Assessing a Franchise" provides some excellent insight.

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