The state of California has some of the most stringent laws when it comes to franchising. After all, in the 1970s California was the first state to pass a franchise registration law at the state level. So before you consider expanding to The Golden State, make sure you are aware of the current registration laws.
California Registration Laws for Franchising
The franchise registration law is enacted. Registration is required, with a recommended filing time of 90 days. The registration fee is $675. The registration requirements include filing an FDD with California Addenda and related documents. The related documents include:
- Uniform Franchise Registration Application
- Franchisor’s Costs and Sources of Funds
- Uniform Consent to Service of Process
- Franchise Seller Disclosure Form
- Guarantee of Performance (if required)
- Consent of Accountants
- Authorization of Disclosure of Financial Records
- Notice of Exemption for Interstate Advertisements (if you have a website)
- Advertising or promotional materials directed to prospective franchisees
These documents must also be included as PDFs on a CD-ROM, and future advertising materials must be filed three days before use.
Also, the Business Opportunity law is enacted. Contracts for the Seller-Assisted Marketing Plan Act provide an exemption for franchisors who are effectively registered under the franchise registration law.
These laws are set in place to protect potential franchisees and to accurately disclose information about your business opportunity. For assistance with registering in California, it is best to connect with an experienced franchise attorney.