USA Law and Practice Contributed by: David B. Ramsey and Michelle Murray-Bertrand, Kaufmann Gildin & Robbins LLP
applications or other procedural requirements must be satisfied, both under federal law and any applicable
similar from state to state, but each state has its own particular requirements and forms. In Michigan, the “registration” process simply involves filing a one- page notice with the state. In Wisconsin and Indiana, the FDD along with certain state-specific forms signed by an executive of the franchisor (certifying the accu - racy of the contents of the FDD) need to be filed with the state, but the state does very little, if any, review of those documents and routinely responds with an “effective letter” (stating the franchise registration is effective) within a short period of time. Hawaii rarely, but occasionally responds to registration filings with comments, although it is not clear from Hawaii’s fran - chise statute that its franchise administrator actually has authority to require a franchisor to respond to its comments (but franchisors generally do). In the remainder of the states previously listed, state examiners review the FDD, forms and other required materials (such as Franchise Seller Disclosure Forms) submitted to them, may issue comment letters to the franchisor which must be addressed to the examiner’s satisfaction, and will then issue an “effective letter” regarding the franchise registration. In some states, depending on the number and nature of comments from the examiner, this can result in a back-and- forth correspondence process that can take weeks or months to complete before the state examiner is satisfied and issues the “effective letter”. Occasion - ally, different states’ franchise examiners will issue comments that contradict each other – in which case, they will either modify their comments or, if they are amenable, will allow their comments to be addressed on a state-specific basis by means of state-specific addenda to the FDD and/or to the form of franchise agreement that is included in the FDD. Thereafter, a franchisor must amend its FDD, through a filing with each applicable state where it offers fran - chises, any time that there is a material change in its franchise offering or the contents of its FDD – includ - ing, where required, by filing an amendment applica - tion with each state in which it offers and sells fran - chises. In addition, at least once per year, a franchisor must make a “renewal” filing (technically, an FDD amendment filing) to incorporate the financial state - ments for its most recently ended fiscal year, which in most cases are required to be audited.
state law, before relying on an exemption. 2.4 Franchise Disclosure Language/ Translation Requirements
English language is required. Neither the FTC Fran - chise Rule nor US state franchise disclosure and regis - tration laws require franchisors to translate their FDDs into a foreign language. To the contrary, federal and state franchise laws only require FDDs to be prepared in “plain English” and presented in a clear, concise and understandable manner. While franchisors may choose to provide translated versions of their FDDs for business, operational or practical reasons, they are not statutorily required to do so. Accordingly, an FDD written in plain English is sufficient to comply with the Rule and applicable US state franchise disclosure and registration laws. There are franchise registration laws in 14 states in the USA, as discussed in 1.2 Franchise Regulation and 2.1 Mandatory Disclosure – namely California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minne - sota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin. Otherwise, for franchise offers or sales in the rest of the states, only federal franchise law (the FTC Fran - chise Rule) applies, which does not require any reg - istration or other filing of a franchisor’s FDD with any government agency. 3. Franchise Registration 3.1 Mandatory Registration If a franchisor does not have a federally registered trade mark for their franchise brand, they may also need to register their FDD in four additional states due to the broad scope of those states’ “business opportunity” laws: Connecticut, North Carolina, South Carolina and Maine. 3.2 Franchise Registration Process Where there are state franchise pre-sale registration laws – that is, in the Registration States listed in 1.2 Franchise Regulation – the registration process is
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