In Brief:

      • Some U.S. states, called franchise registration states, require that franchisors register their FDD in order to advertise and sell franchises.
      • As franchising is more strictly regulated at the state level, these states have various laws regarding FDD registration and filing that may differ from one another.
      • Below, we explore which states are franchise registration states and how the state laws and the registration process works in detail!

Franchising is regulated at the Federal level through the FTC Franchise Rule, but that law, as sweeping and comprehensive as it is, only deals with franchise disclosure rules. Franchise relationship and registration is instead regulated at the state level, leading to a multi-tiered approach to how franchising is governed by the law in the United States. 

This unique approach has led to the creation of several franchise registration states across the country which, as the phrase suggests, requires franchisors to register or at least file with them in order to do business. But just which states require registration? How exactly does the process work?

Below, we take a closer look at franchise registration states in detail, examine franchise registration laws across the country, and see how state franchise laws have shaped franchising across the U.S. in general. Let’s get started! 


What are the Franchise Registration States?

Franchise registration law in the U.S. generally means not only that the franchise must be registered and approved to conduct business in the state, but any franchising advertising and sales must be registered as well. 

Not all states are franchise registration states, but those that are typically require that the franchisor submit its franchise disclosure document (FDD) and formally register within the state before offering any franchise sales to prospective franchisees. These states include:

  • California
  • Hawaii
  • Illinois
  • Indiana
  • Maryland
  • Michigan 
  • Minnesota
  • New York
  • North Dakota
  • Rhode Island
  • South Dakota
  • Virginia
  • Washington
  • Wisconsin

Most of the above states require that both the FDD and registration application be filed together in order to be approved to sell franchises. It’s also important to note that certain franchise registration states, and also in some franchise filing states, have different criteria in order for a business to qualify as a franchise. 

For California, Illinois, Indiana, Iowa, Maryland, Michigan, North Dakota, Oregon, Rhode Island, Virginia, Washington, and Wisconsin, the criteria is as follows:

  • Required Fee. The franchisee must pay a fee to the franchisor. 
  • Marketing Plan. The franchise has been given permission to sell goods and services approved by a franchisor’s marketing plan. 
  • Trademark Association. Any business conducted by the franchisee must be in association with the franchisor’s registered trademark. 

Hawaii, Minnesota, Mississippi, Nebraska, and South Dakota have a slightly different set of criteria. Specifically, it includes:

  • Community of Interest. The franchise must have a certain community of interest or demographic group to market its goods and services to. 
  • Required Fee. The franchisee is required to pay a fee to the franchisor. 
  • Trademark License. The franchisee is granted the right to use the franchisor’s registered trademarks. 

Franchise Filing States

In addition, a number of franchise filing states exist. These states require franchises to file and pay a fee, but don’t require FDD registration and approval like the franchise registration states do. Specifically, these states and their fees include:

  • Connecticut – franchise filing fee of $400.
  • Florida – franchise filing fee of $100.
  • Kentucky – franchise filing fee of $0.
  • Maine – filing fee of $25.
  • Nebraska – filing fee of $100.
  • North Carolina – filing fee of $250.
  • South Carolina – filing fee of $100.
  • Texas – filing fee of $25.
  • Utah – filing fee of $100.

Franchise Registration States Key Information

Need the point of contact and fee registration information for a franchise registration state? Find it below!

CALIFORNIA

Franchise Division Department of Corporations 

1515 K Street, Suite 200 Sacramento, CA 95814

Franchise Registration Fee – $675

HAWAII

Commissioner of Securities, Department of Commerce and Consumer Affairs Business Registration Division, Securities Compliance Branch 

335 Merchant Street, Room 203, Honolulu, HA 96813

Franchise Registration Fee – $125

ILLINOIS

Franchise Division Office of Attorney General 

500 South Second Street, Springfield IL 62701

Franchise Registration Fee – $500

INDIANA

Franchise Division Office of Secretary of State 

302 W. Washington St., Rm. E111 Indianapolis, IN 46204

Franchise Registration Fee – $500

MARYLAND

Office of the Attorney General Division of Securities 

200 St Paul Place Baltimore, Maryland 21202-2020

Franchise Registration Fee – $500

MICHIGAN

Consumer Protection Division, Franchise Section 

PO Box 30213 Lansing MI 48909

Franchise Registration Fee – $250

MINNESOTA

Minnesota Department of Commerce 

85 7th Place East, Suite 500 St. Paul, MN 55101-2198

Franchise Registration Fee – $400

NORTH DAKOTA

Franchise Division Office of Securities Commission 

600 East Boulevard – 5th Floor Bismarck, ND 58505

Franchise Registration Fee – $250

NEW YORK

Franchise & Securities Division, State Department of Law 

120 Broadway 23rd Floor New York NY 10271

Franchise Registration Fee – $750

RHODE ISLAND

Franchise Office Division of Securities 

John O. Pastore Office Complex 1511 Pontiac Avenue, Bldg. 69-1 Cranston, RI 02910

Registration Fee – $500

SOUTH DAKOTA

Department of Revenue and Regulation Division of Securities 

445 East Capitol Ave. Pierre, SD 57501

Registration Fee – $250

VIRGINIA

State Corporation Commission, Division of Securities and Retail Franchising 

1300 E. Main St. 9th Floor Richmond, VA 23219

Registration Fee – $500

WASHINGTON

Department of Financial Institutions, Securities Division 

P.O. Box 9033 Olympia, WA 98507-9033

Registration Fee – $600

WISCONSIN

Department of Financial Institutions, Division of Securities 

345 West Washington Ave., 4th Floor Madison, WI 53703

Registration Fee – $400

How Franchise Registration State Laws Work

While the specifics of registering a franchise vary by state law, it typically involves the submission, review, and approval of a franchise’s FDD by a state regulatory agency. State registrations usually last one year, but can be renewed with a renewal application or annual report. One notable exception is Maryland, which, instead of only requiring annual registration, also requires franchisors to file quarterly reports. 

In addition to registering the franchise itself, many states also regulate and restrict advertising for franchise unit sales to shield entrepreneurs from potentially false or misleading advertisements. States that regulate franchise advertising include California, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota, and Washington. 

Many franchise registration states also require that franchisors file information regarding their salespeople. Typically, this includes registering the salesperson’s home address, business address, phone number, date of birth, Social Security number, five-year employment history, and other criteria. States that require the registration of franchise salespeople include California, Hawaii, Illinois, Indiana, Maryland, Minnesota, North Dakota, Rhode Island, South Dakota, and Washington. 

The Franchise Registration Process

The franchise registration process, including the required documents, varies by state. However, the North America Securities Administrators Association (NASAA) 2008 Franchise Registration and Disclosure Guidelines offer a list of documents to guide franchises in the registration process. They include:

  • FDD
  • Uniform Franchise Registration Application
  • Franchisor’s Costs and Sources of Funds
  • Uniform Franchise Consent to Service of Process
  • Franchise Seller Disclosure Forms
  • Application Fee
  • Consent of Accountant
  • Guaranty of Performance
  • Advertising/Promotional Materials

Generally speaking, all of these documents need to be present when the franchise is either registered or its filing renewed with a state’s regulators. For renewals specifically, franchisors are usually required to provide the updated FDD with a blackline of the original document to show any changes made to it. However, some states such as Indiana, South Dakota, and Wisconsin only require the updated FDD. Other states, like Hawaii and New York, also require the franchisor to disclose the number of franchises sold within the state over the past year. 

Registering Multi-Unit Franchises

Registering multi-unit franchise offerings have traditionally had little clarity when it comes to regulations at the state level, making it difficult for franchisors, regulators, and attorneys alike to proceed with how to register them. 

However, NASAA issued its Multi-Unit Commentary document in September 2014 to help clarify the guidelines for registering and disclosing the sale of multi-unit franchises at the state level. The document advised that franchisors may grant franchisees the right to develop multiple units in the same FDD used to offer single units for sale. 

Knowing Franchise Registration State Law Can Help You Understand Franchising!

By understanding which states are franchise registration states and how franchise law is applied at the state and local level, you can better understand how franchising works in the United States. This, in turn, can help you succeed as an entrepreneur and finally realize your dream of becoming your own boss!

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