Renewal season is upon us and, for franchisors with fiscal years ending December 31st, don’t forget that requirements of the Multi-Unit Commentary issued by NASAA in 2014 must be met by Spring 2015. The full Commentary can be accessed here.
One of the clarifications/changes which the Commentary provides–and compliance with which may require substantial work–is that disclosure for unit franchise programs and area representative programs may no longer be combined in a single Franchise Disclosure Document or a single state registration. Instead, those programs must be disclosed and registered in separate FDDs. This means a franchisor that has previously combined both programs into one FDD must revise the existing FDD to disclose only the unit franchise program. The franchisor will need to create a separate FDD for the area representative offering and file for a new registration for that program.
Renewal and amendment filings will be reviewed for compliance with the Multi-Unit Commentary. The Commentary also sets forth preferred terminology and clarifies what information must be included in FDDs–such as in the case of a subfranchisor (also commonly known as a Master Franchisor), which may be different than a franchisor’s current practice.
For those who have not been following this issue, we urge you to consider our prior post on this subject.