Connecticut

Registration or Filing Required? Yes, Filing
Business Opportunity Laws? Yes

Connecticut is not a franchise registration state but does require a one-time filing for a Business Opportunity Exemption, prior to offering or selling franchises in the state. More information can be found on the Connecticut Department of Banking Website.

What do I Need to do to File for an Exemption?

Business Opportunities in Connecticut are controlled by the Connecticut Business Opportunity Investment Act. A franchise would typically fall under the state’s definition and require filing and registration. However, the Act specifically excludes business opportunities that are made in conjunction with licensing a federally registered trademark from its registration requirements.

There is no specific form or fee to file an exclusion notice. However, the state has provided a useful checklist of requirements for submitting an exemption. To summarize, you must submit a cover letter with attachments, including the franchisor’s name, address, state and date of formation. The letter should also clearly state you are requesting exclusion from registration. Additionally, you must provide proof that your trademark is federally registered, AND that the mark is either owned by, assigned to, or licensed to the franchising entity claiming exclusion. This is a one-time filing, but franchisors must submit additional filings whenever there is a material change that would affect the exclusion, including a change in the franchising entity, trademark status or license agreements. There is no fee for filing for an exclusion. The state statues aren’t very clear whether a franchisor has to file a notice or can simply rely on the exemption, so to be safe we always recommend filing a notice of exemption when you begin franchising in Connecticut.

What if I don’t have a Federally Registered Trademark?

If you do not have a federally registered trademark, then you must register your FDD with the state’s Department of Banking, which provides useful instructions for doing so. In registering, you must provide:

1. An Application to Register Business Opportunity.
2. A Consent to Service of Process.
3. A copy of your FDD.
4. Financial Statements: including balance sheets, income statements and statements of changes (the state may require audited financial statements if the franchisor has been in business for less than a year).
5. Copies of advertisements.
6. Copies of any other contracts related to the business opportunity.
7. Proof of financial assurance if required (usually a bond or proof of trust account).
8. A $400 registration fee with a check payable to “Treasurer, State of Connecticut”.

This registration must be renewed annually within 120 days of the end of your fiscal year. The cost of renewal is $100. The registration process is much more arduous than that of exemption, so we highly recommend exclusion if your franchise qualifies to do so.

Does Connecticut Have Specific Franchise Laws?

Yes. In addition to the Business Opportunity Act, Connecticut has additional regulations governing the franchisor-franchisee relationship through the Connecticut Franchise Act. While not very long, the Franchise Act does impose additional burdens on franchisors. Among other things, the Franchise Act:

• Restricts the franchisor’s ability to terminate or not renew the franchise agreement without cause.
• Requires franchisors to provide franchisees with 60 days’ notice of termination or non-renewal (6 months for non-renewal in certain conditions).
• Prohibits franchise agreements with a term of less than 3 years.
• Requires the franchisor to provide fair and reasonable compensation to the franchisee for its inventory, supplies, equipment and furnishings upon termination of the franchise agreement.
• Voids certain waiver of rights provisions.
• Gives franchisees the right to bring suit against a franchisor for violation of the Franchise Act’s provisions.

Fun Fact: If you’re into intellectual property milestones (we are obviously), you’ll find it fascinating to know that the first woman to ever receive a U.S. patent was Mary Kies of South Killingly, Connecticut, and it was issued in 1809!