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The Franchise Disclosure Document (FDD) is the key document for legal compliance when selling a franchise opportunity.  The FDD and franchise sales are regulated by the Federal Trade Commission (FTC).  In addition to FTC regulation, 18 states have procedural laws which specifically apply to the sale of franchises in that particular state. Other states have laws which generally apply to sales of business opportunities.  It is important to note that quite often, a particular state’s laws are more stringent than the FTC rules.  At present, prior to selling a franchise opportunity in the states below, you must:

  1. Register
  2. Be qualified to conduct business in the state
  3. Register to sell franchises in the state

 

The states are: California, Hawaii, Illinois, Indiana, Maryland, Michigan, New York, North Dakota, Rhode Island, South Dakota,Virginia, Washington and Wisconsin

 

Prior to selling a franchise opportunity in the following states, you must:

  1. Register
  2. Be qualified to conduct business in that state
  3. File a short notice

 

The states are: Florida, Kentucky, Nebraska, Texas, Utah

 

Some states like Ohio may, upon certain conditions, require the posting of a surety bond.

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