I’ve just issued my FDD and want to start selling franchises with it. What are the next steps?

This depends on where you’d like to sell franchises. Registration states require you to file your FDD and pay a fee, and most of these states have a formal comment letter process. Before you can start selling in the registration states, you’ll need to receive an acknowledgement or permit from the state.

In the rest of the states, you’ll need to pay attention to business opportunity laws before getting started. Some states require you file an exemption notice, and others require you to have a registered trademark in order to avoid business opportunity laws.

The chart below shows the initial requirements for the states and jurisdictions that fall under the federal rule.

I’ve just made my annual updates to the FDD. Now what?

Once you’ve made annual updates and issued your new FDD, you must stop marketing and selling franchises (i.e. “go dark”) in all of the registration states except California until you receive a renewal acknowledgement or permit. California lets you market your franchise while examiners review your renewal, but you can’t close any sales. In the non-registration states, some of the states require you re-file the business opportunity exemption notice each year.

Keep in mind that when you’ve issued your updated FDD, the old FDD is dead and can’t be used. This means that any prospects in the pipeline need to get the new FDD and a fresh 14-day period to review the new FDD before you accept money or sign any agreements.

The chart below shows the requirements during your renewal period.

Here is a chart showing the registration or filing state’s expiration timelines:

State

Initial Filing Requirements

Offers and Sales During Renewal Periods
Alabama No franchise or business opportunity registration is required. N/A
Alaska No franchise or business opportunity registration is required. N/A
Arizona No franchise or business opportunity registration is required. N/A
Arkansas No franchise or business opportunity registration is required. N/A
California A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor may offer (BUT NOT SELL) a franchise while an application for renewal or amendment is pending if the prospective franchisee receives the following:

The FDD as filed.

Written statement from the franchisor that:

• The filing has been made, but is not effective;

• The information in the FDD and exhibits has not been reviewed by the commissioner; and

• The franchisor will deliver to the prospective franchisee an effective FDD and exhibits at least 14 days prior to execution by the prospective franchisee of a binding agreement or payment, showing all changes from the FDD originally received by the prospective franchisee.

The effective FDD showing all changes from the FDD originally received by the prospective franchisee.
Colorado No franchise or business opportunity registration is required. N/A
Connecticut If the federal trademark registration is owned by a third party, the trademark registration and license agreement must be filed. Franchisors with a federal registered trademark are exempt from registration. Franchisors without a federal registered trademark must register as a business opportunity. N/A
Delaware No franchise or business opportunity registration is required. N/A
District of Columbia No franchise or business opportunity registration is required. N/A
Florida Business Opportunity exemption is effective immediately upon receipt of the application. Business Opportunity exemption is effective immediately upon receipt of the application.
Georgia Business Opportunity law provides exemption for franchisors that hold a federal or state registered trademark. N/A
Hawaii Franchisor can sell a franchise on the eighth day after the state receives the FDD. However, we strongly suggest you contact us to confirm your effective date with the state of Hawaii before selling a franchise. Franchisor can sell a franchise on the eighth day after the state receives the FDD. However, we strongly suggest you contact us to confirm your effective date with the state of Hawaii before selling a franchise.
Idaho No franchise or business opportunity registration is required. N/A
Illinois The registration will become automatically effective on the 21st day after the filing was received, unless a denial order has been issued. Because the state almost always sends comment letters for initial filings, we strongly recommend you wait until we have given an effective date before you offer or sell franchises in Illinois. Renewals are automatically effective two business days after receipt of the application. However, the application is subject to examiner review and a stop order may be issued at any time. Reviews are usually completed within 30 days (but may come as late as 9 months later).
Indiana Registration is effective upon receipt of the application. Registration is effective upon receipt of the application.
Iowa No franchise or business opportunity registration is required. N/A
Kansas No franchise or business opportunity registration is required. N/A
Kentucky Business Opportunity exemption is effective immediately upon receipt of the application. N/A
Louisiana Business Opportunity law provides exemption for franchisors that hold a federal or state registered trademark. N/A
Maine Business Opportunity law provides exemption for franchisors that hold a federal or state registered trademark./td> N/A
Maryland A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
Massachusetts No franchise or business opportunity registration is required. N/A
Michigan Technically, a registration in effective upon receipt. However, we suggest you wait until we have received the date-stamped notice from the state before offering or selling franchises. Technically, a registration in effective upon receipt. However, we suggest you wait until we have received the date-stamped notice from the state before offering or selling franchises.
Minnesota A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
Mississippi No franchise or business opportunity registration is required. N/A
Missouri No franchise or business opportunity registration is required. N/A
Montana No franchise or business opportunity registration is required. N/A
Nebraska Registration is effective immediately upon receipt of the application. N/A
Nevada No franchise or business opportunity registration is required. N/A
New Hampshire No franchise or business opportunity registration is required. N/A
New Jersey No franchise or business opportunity registration is required. N/A
New Mexico No franchise or business opportunity registration is required. N/A
New York A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
North Carolina Business Opportunity law provides exemption for franchisors that hold a federal registered trademark. N/A
North Dakota A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
Ohio No franchise or business opportunity registration is required. N/A
Oklahoma No franchise registration is required. Business opportunity law provides exemption for franchisors that are in compliance with FTC Rule. N/A
Oregon No franchise or business opportunity registration is required. N/A
Pennsylvania No franchise or business opportunity registration is required. N/A
Puerto Rico No franchise or business opportunity registration is required. N/A
Rhode Island If no stop order is in effect, a franchise registration application is effective on the 30th business day after filing the application. If additional information is required, the application becomes effective on the 15th business day after the additional information is filed. Rhode Island will typically send a permit much earlier than 30 days. If no stop order is in effect, a franchise registration application is effective on the 30th business day after filing the application. If additional information is required, the application becomes effective on the 15thbusiness day after the additional information is filed. Rhode Island will typically send a permit much earlier than 30 days.
South Carolina Business Opportunity law provides exemption for franchisors that hold a federal or state registered trademark. N/A
South Dakota A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
Tennessee No franchise or business opportunity registration is required. N/A
Texas Filing is effective immediately upon receipt of the application. N/A
U.S. Virgin Islands No franchise or business opportunity registration is required. N/A
Utah Business Opportunity exemption is effective immediately upon receipt of the application. Business Opportunity exemption is effective immediately upon receipt of the application.
Vermont No franchise or business opportunity registration is required. N/A
Virginia A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
Washington A franchisor cannot offer or sell franchises until it receives a permit letter from the state. A franchisor cannot offer or sell franchises until it receives a permit letter from the state.
West Virginia No franchise or business opportunity registration is required. N/A
Wisconsin Registration is effective upon receipt of the application. Registration is effective upon receipt of the application.
Wyoming No franchise or business opportunity registration is required. N/A