Franchise Questions
What are the requirements for advertising franchises?
Franchise for sale! Only fifty cents (well, not really but you get the idea). You have some amazing advertising pieces to sell your franchise. So you can just use them however and wherever you want, right? No. This would be too simple.
Certain states require you to pre-file advertising materials and wait a specified time before using them in the state. Some states require that you register your franchise offering before you can advertise it.
Which states require you to pre-file advertising materials?
You must submit franchise advertising before it is used in 6 states, and the advertising must be on file for 3 to 7 days to give state examiners time to review and comment:
| State | Number of Days |
| California | 3 business days |
| Maryland | 7 business days |
| Minnesota | 5 business days |
| New York | 7 calendar days |
| North Dakota | 5 business days |
| Washington | 7 calendar days |
If you don’t hear back from the state within these time frames, you can start using the advertisements in that state. You may also want to contact the examiner to confirm that the advertising filing was received.
There is no filing fee to pre-file advertising materials.
Are there any other states with rules on advertising?
A total of 20 states require an advertising filing (i.e. registration or notice filing):
| State | Required Filing |
| California | Registration & Pre-Filing |
| Connecticut | Notice Filing |
| Florida | Notice Filing |
| Hawaii | Registration |
| Illinois | Registration |
| Indiana | Registration |
| Kentucky | Notice Filing |
| Maryland | Registration & Pre-Filing |
| Michigan | Registration |
| Minnesota | Registration & Pre-Filing |
| Nebraska | Notice Filing |
| New York | Registration & Pre-Filing |
| North Dakota | Registration & Pre-Filing |
| Rhode Island | Registration |
| South Dakota | Registration |
| Texas | Notice Filing |
| Utah | Notice Filing |
| Virginia | Registration |
| Washington | Registration & Pre-Filing |
| Wisconsin | Registration |
And don’t forget: every state requires that you first have a finalized FDD that complies with the FTC Rule before advertising.
Is there an exception for internet advertisements?
Did you know that Internet advertising and company websites are also considered advertising? Thankfully there are exemptions for these “advertisements.”
Internet advertisements and company websites are exempt from the pre-filing requirement if you meet certain requirements:
- You disclose the website URL on the cover page of your registered FDD or file a notice with the state within 5 days of publishing the internet advertisement, and
- The advertising is not directed to any person in the state.
In addition, California requires you to provide this information on their own form when you register or renew the FDD.
What disclaimers do I need to include on my advertisements?
Your advertising materials needs to include a disclaimer. The disclaimer should be customized to the content of your advertisement and the states where you are using it. Below are some example disclaimers:
General Disclaimer
“This advertisement is not an offering. An offering can only be made by a Franchise Disclosure Document filed with the referenced state, which filing does not constitute approval. [FRANCHISE] franchises will not be sold to any resident of any such jurisdiction until the offering has been exempted from the requirements of, or duly registered in and approved by, such jurisdiction and the required Franchise Disclosure Document has been delivered to the prospective franchisee before the sale in compliance with applicable law. The following states regulate the offer and sale of franchises: CA, HI, IN, IL, MD, MI, MN, NY, ND, RI, SD, VA, WA and WI. If you reside in one of these states, you may have certain rights under applicable franchise laws.”
State-Specific Disclaimers and Franchisor Information
Some states require specific disclaimers or information to be included in advertisements as follows:
| State | Disclaimer/Information |
| California | Include this language: THIS FRANCHISE HAS BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE COMMISSIONER OF BUSINESS OVERSIGHT NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE, AND NOT MISLEADING. |
| Maryland | You must include the franchisor’s name, address, and phone number. |
| Minnesota | You must include the franchisor’s name, address, telephone number, and state registration number. |
| New York | Include this language: THIS ADVERTISEMENT IS NOT AN OFFERING. AN OFFERING CAN ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. SUCH FILING DOES NOT CONSTITUTE APPROVAL BY THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. |
Disclaimer for Using Financial Performance Representations
“[Gross revenues/net profit/etc.] figures based on unaudited financial information as submitted by franchisees operating from [DATE] to [DATE] and as published in Item 19 of our [ISSUANCE DATE] Franchise Disclosure Document (FDD). As of [DATE] there were [NUMBER] [FRANCHISE] outlets in operation. Some outlets have sold/earned this amount. Your individual results may differ. There is no assurance that you’ll sell/earn as much. Written substantiation for the financial performance representation will be made available to the prospective franchisee upon reasonable request. See Item 19 of our [ISSUANCE DATE] FDD for a definition of gross revenues and for further information.”
Keep in mind that if you want to include earning claims in your advertisements, you can only include figures that already appear in Item 19 of your FDD, without any alteration.
We’d recommend you always first send your advertising materials to a franchise attorney for review, even if you aren’t using them in a pre-submission state. This helps to avoid inadvertently saying something illegal or that you’ll later regret.