Adoption of Franchise Act Interpretive Statement

Thursday, June 11, 2015
The Securities Division has adopted Franchise Act Interpretive Statement FIS-08 (“Interpretive Statement”). 
 
The Interpretive Statement provides guidance on acceptable methods of demonstrating compliance with the net worth requirement found in RCW 19.100.030(4)(b)(i)(4).  In summary, an experienced franchisor that claims exemption from franchise registration in reliance upon RCW 19.100.030(4)(a) and (b)(i), and that has a net worth of not less than $1,000,000 and is at least 80% owned by a corporation which has a net worth on a consolidated basis of not less than $5,000,000 may submit unaudited financial statements if it is unable to submit audited financial statements separate from the parent company.  Alternatively, if unaudited financial statements cannot be obtained without incurring excessive costs, the franchisor may submit an executed Guarantee of Performance and signed affidavit in addition to the audited financial statements of the parent.
 
The complete text of the Interpretive Statement is on the Securities Division Interpretive Statements webpage.

Franchise Act Interpretive Statements