What is the procedure for granting a franchise?

In Washington, the procedure for granting a franchise is regulated by the Washington Franchise Investment Protection Act. This act requires potential franchisors, or those who are issuing franchises, to provide potential franchisees, or those who are wishing to purchase the franchise, with a Franchise Disclosure Document (FDD). This document must include certain information such as: the identities and backgrounds of all the principals or owners of the franchisor, the financial statements of the franchisor, the terms of sale of the franchise, the ongoing obligations of the franchisee and the franchisor, and any other relevant information. After the prospective franchisee has read and satisfied themselves with the FDD, they must sign a franchise agreement with the franchisor. This agreement outlines the rights and responsibilities of both parties. Additionally, the franchisor must register their franchise with the Washington State Department of Financial Institutions (DFI) prior to selling any franchises. This registration requires the franchisor to provide certain documents such as a copy of the FDD, a copy of the franchise agreement, and financial statements. Finally, the franchisor must comply with any applicable federal and state laws. It is important to note that not all businesses offering franchises are compliant with these regulations and may be subject to legal action. It is important that potential franchisees do their homework before investing in any franchise to make sure the franchise in question is compliant with state law.

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What is the procedure for granting a franchise?

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