Washington State Department of Financial Institutions

Franchise Frequently asked Questions

INITIAL FRANCHISE REGISTRATION SUMMARY

What do I need to file?

Franchise Registration Application (.pdf format) (including Uniform Consent to Service of Process, Corporate Acknowledgment or Individual or Partnership Acknowledgment, and information required by the Supplemental Information Page).

Registration Fee: Check for $600 payable to the Washington State Treasurer.

Franchise Disclosure Document (FDD) (2 copies), including the Washington Addendum if the FDD is not being amended to conform to Washington law (see Sample Washington Franchise Agreement Addendum), and including all agreements to be proposed to franchisees. In Item No. 21, the FDD also requires audited financial statements.

Salesman Disclosure Form (.pdf format) (for each officer, director, or employee who will be selling the offering - if you are using third parties to sell your franchise they will have to register as Franchise Brokers).

Consent of Accountants to the use of their audited financial statements of your company in connection with the offering (photocopy is OK).

Advertising (all advertising must be filed with the Division at least seven days prior to use).

When do I need to file?

RCW 19.100.060 provides for a minimum filing period of at least 15 business days before the offering is effective in Washington. However, particularly in the case of an initial registration, you will want to file sooner than that in order to provide sufficient time to resolve any comments the Division analyst may have.

Are there any other requirements?
Depending on the financial condition of the franchisor, the analyst may require the franchisor to file a Franchise Impound Agreement. (.pdf format) The analyst will contact you if such a requirement is deemed necessary. In lieu of an impound, the analyst may accept a Guarantee of Performance from a parent company, a surety bond, or deferral of receipt of initial franchise fees.

Franchise registrations are effective for a one year period. A permit will be sent to you which states the effective dates and any conditions that are imposed.

My company does not have audited financial statements. Can we still register?

More information is needed to answer this question. For your initial registration year, financial statements prepared in accordance with generally accepted accounting principles (GAAP) may be accepted. The NASAA Franchise Guidelines (PDF) states:

A start-up franchise system that does not yet have audited financial statements may phase-in the use of audited financial statements by providing, at a minimum, the following statements at the indicated times:

(i) The franchisor’s first partial or full fiscal year selling franchises. An unaudited opening balance sheet.
(ii) The franchisor’s second fiscal year selling franchises. Audited balance sheet opinion as of the end of the first partial or full fiscal year selling franchises.
(iii) The franchisor’s third and subsequent fiscal years selling franchises. All required financial statements for the previous fiscal year, plus any previously disclosed audited statements that still must be disclosed.


However, an impound of the franchise fee or an acceptable alternative would likely be required. In lieu of an impound, the Division may accept a Guarantee of Performance from a parent company, a surety bond, or deferral of receipt of the initial franchise fees.

RENEWAL REGISTRATION SUMMARY

What do I need to file?

Franchise Registration Application (.pdf format) (first page with renewal box checked, signature page, and information required by the Supplemental Information Page; i.e., you don't have to file another consent to service of process).

Renewal Fee: Check for $100 payable to the Washington State Treasurer

Uniform Franchise Offering Circular (2 copies - one clean, one marked to show changes from prior year), including Washington Addendum and audited financial statements.

Salesman Disclosure Form (.pdf format)

Consent of Accountants

Advertising - any new ads that will be used

Any other requirements?

The analyst will reevaluate the financial condition of the franchisor and may continue, remove, or impose an impound (or allow one of the alternatives - surety bond, guarantee or deferral of fees) as the financial circumstances of the franchisor may warrant.

AMENDMENT SUMMARY

An amendment is necessary whenever there is a material change to the information contained in the FDD.
What do I need to file?

Franchise Registration Application (.pdf format) (first page and signature page) with amendment box checked.

Amendment Fee: Check for $100 payable to the Washington State Treasurer

FDD (2 copies of the affected pages - one clean, one marked to show the changes).

When do I need to file?

RCW 19.100.070(3) states that amendments should be filed "as soon as reasonably possible and in any case, before the further sale of any franchise."

FRANCHISE EXEMPTION FILING SUMMARY

Franchisors intending to rely on the exemption contained in RCW 19.100.030(4)(b)(i), the so-called "big boy" exemption must make an annual filing with the Division and pay the fee.

What do I need to file?

Annual Notice of Claim of Exemption (.pdf format)

Fee: Check for $100 payable to the Washington State Treasurer

The franchisor's (or its parent company's) most recent audited financial statements showing compliance with the net worth test set forth in the statute.

When do I need to file?

Ten days prior to the first sale in Washington for an initial filing. Renewals should also be submitted ten days prior to the expiration of the exemption period.

The Division will issue you an exemption acknowledgment letter which will state the dates for which the exemption is effective.

FRANCHISE BROKER REGISTRATION SUMMARY

Third parties selling franchises on behalf of a franchisor must register as franchise brokers. The requirements are set forth in RCW 19.100.140 and WAC 460-82-200.

INITIAL REGISTRATION

What do I need to File?

Franchise Broker License Application (.pdf format)

Financial Statement

Fee: Check for $50 payable to the Washington State Treasurer

When do I need to file?

There is no specified time period. Franchise broker applications are usually sent in with the franchise registration applications, and are made effective when the franchise is effective. You can be licensed without having been appointed as a broker by a franchisor, but you are not allowed to make offers to prospective franchisees until the appointment page has been submitted to the Division.
 
The Division will issue you a franchise broker license. It expires on December 31st and must be renewed annually.

 

RENEWAL

What do I need to file?
 
Franchise Broker License Application (.pdf format6) if any information needs to be updated from your prior filing or a cover letter requesting renewal.
 
Fee: Check for $25 payable to the Washington State Treasurer
 
When do I need to file?

Prior to January 1st each year.