What are the regulations surrounding the sale of a franchise?

In Washington, a franchisor must comply with certain regulations when selling a franchise. The Washington Franchise Investment Protection Act (FIPA) requires franchisors to provide prospective franchisees with a disclosure document that contains information about the franchise, such as its history, products and services offered, and any fees and other expenses associated with it. The disclosure document must be provided at least 14 days before any money is collected from the franchisee. Franchisors must also provide franchisees with a copy of the franchise agreement and a statement that the agreement and all documents related to the franchise have been legally reviewed and approved. The statement must also include a description of the buyer’s rights and remedies, including the right to cancel the franchise within five days of signing. The franchisor is also required to provide prospective franchisees with a list of all existing franchisees in the same area. This list must include the name, address, and contact information of each franchisee. Finally, franchisees must provide the franchisor with a copy of their financial statements in order for the franchisor to assess whether they are financially capable of operating the franchise. The franchisor must also provide the prospective franchisee with a copy of the franchisee’s financial statements prior to the sale. Overall, in order to comply with the FIPA, franchisors in Washington must provide prospective franchisees with full disclosure of the franchise, a legally-reviewed franchise agreement, a list of existing franchisees, and financial documentation of the prospective franchisee.

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What are the regulations surrounding the sale of a franchise?

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