What is Chocolate Bash required to do in states where they pursue franchise registration?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
The following states have franchise laws that require that the Franchise Disclosure Document be registered or filed with the states, or be exempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
We may register this Disclosure Document in some or all of the following states in accordance with the applicable state law. If and when we pursue franchise registration, or otherwise comply with the franchise investment laws, in these states, the following are the state administrators responsible for the review, registration, and oversight of franchises in each state and the state offices or officials that we will designate as our agents for service of process in those states:
California Corporations Code, Section 31125 requires the franchisor to give the franchisee a disclosure document, approved by the Department Of Financial Protection and Innovation, prior to a solicitation of a proposed material modification of an existing franchise.
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE OFFERING CIRCULAR.
Source: Item 23 — RECEIPTS (FDD pages 39–101)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, if Chocolate Bash pursues franchise registration in states with franchise laws, they must adhere to the applicable state law. The states that require the Franchise Disclosure Document to be registered or filed are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
For instance, in California, California Corporations Code, Section 31125 mandates that Chocolate Bash provide a disclosure document approved by the Department Of Financial Protection and Innovation before soliciting a proposed material modification of an existing franchise. The California Franchise Investment Law also requires that a copy of all proposed agreements relating to the sale of the franchise be delivered together with the offering circular.
Furthermore, Chocolate Bash must designate a state administrator responsible for the review, registration, and oversight of franchises in each state, as well as state offices or officials that will act as their agents for service of process. This ensures that Chocolate Bash complies with the specific regulatory requirements of each state in which they offer franchises, providing potential franchisees with the necessary information and protections mandated by state laws.