Franchising is a an excellent way to expand the influence of your business and generate financial returns, offering advantages such as access to hardworking and talented operators, passive income opportunities, low risk, and faster expansion. All these assets and more make selling franchises a great option for determined entrepreneurs. However, New York state franchise registration requirements must be met before a business owner can begin the franchising process. Here are the essentials of franchise registration requirements in New York.
A franchise attorney in NY can help with application materials
Prospective franchisors must submit an initial franchise registration application which includes a registration fee of $750 payable to The New York State Department of Law, a Franchisor’s Cost and Source of Funds form, a Consent to Service of Process form, a Sales Agent Disclosure form, and a Franchise Disclosure Document (or FDD). A Guarantee of Performance form is also required if the FDD includes financial statements of an affiliated company.
New York FDDs require capitalization notations
New York state franchise registration requirements dictate that franchisors are required to include an audited opening balance sheet in their FDD. This balance sheet will be evaluated by regulators who will determine whether the franchisor possesses enough capital (cash deposit balances) to register. If capital is insufficient, applicants may be required to agree to regulatory restrictions. One way to improve business capital is to secure a long-term loan which comes from an officer or stakeholder in the New York franchise that is not repayable for a minimum of 12 months. A franchise consultant can guide you through the process.
A NY franchise attorney can help with registration renewal
The state of New York requires franchise registrations to be renewed at least annually and within 120 days of the end of the franchisor’s fiscal year. The renewal application should include a filing fee of $150, along with a variety of forms listed on the Franchise Registration Information Sheet. If registration is not renewed within the 120-day period, it will expire, and the franchisor may not offer or sell any franchises in New York until a renewal has been submitted and accepted by the Department of Law. As a franchise attorney in NY, my office can assist franchisors with maintaining current registration.
Prepare to have legal representation from a NY franchise attorney
Sometimes, disagreements may arise between franchisors and either franchisees or the state of New York. In the case of a franchise dispute, the best course of action is to hire a New York franchise attorney, as they can apply their specialized experience and expertise to achieve the best possible outcome to the situation.
Hiring a lawyer is the best way to make sure your business and FDD adhere to federal and state franchise laws, as well as to prepare for legal disputes. For help from one of the best and most experienced franchise lawyers in America, call Harold L. Kestenbaum — “The Franchise Guru” — at (516) 745-0099.