Renewal season is upon us and, for franchisors with fiscal years ending December 31st, don't forget that requirements of the Multi-Unit Commentary issued by NASAA in 2014 must be met by Spring 2015. The full Commentary can be accessed here.
One of the clarifications/changes which the Commentary provides–and compliance with which may require substantial work–is that disclosure for unit franchise programs and area representative programs may no longer be combined in a single Franchise Disclosure Document or a single state registration. Instead, those programs must be disclosed and registered in separate FDDs. This means a franchisor that has previously combined both programs into one FDD must revise the existing FDD to disclose only the unit franchise program. The franchisor will need to create a separate FDD for the area representative offering and file for a new registration for that program.
Renewal and amendment filings will be reviewed for compliance with the Multi-Unit Commentary. The Commentary also sets forth preferred terminology and clarifies what information must be included in FDDs–such as in the case of a subfranchisor (also commonly known as a Master Franchisor), which may be different than a franchisor's current practice.
For those who have not been following this issue, we urge you to consider our prior post on this subject.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
