What are the reporting obligations of franchisors?

In Washington, franchisors have certain reporting obligations. They must submit a Franchise Disclosure Document (FDD) to potential franchisees at least three business days prior to signing a franchise agreement. The FDD must include certain information such as financial statements, litigation and bankruptcy history, contact information for other franchisees, and a description of the franchisor’s business. In addition, franchisors must provide an audited financial statement to the prospective franchisee within 120 days of the signing of the franchise agreement. Franchisors also have an ongoing obligation to provide certain post-sale information. This includes any material information and changes that may arise during the life of the franchise agreeement such as amendments to the agreement, new procedures or systems, or changes to the franchisors business. This information must be delivered to the franchisee in the same manner as the FDD. Franchisors in Washington must also comply with the Washington Franchising Act. This includes having an adequate disclosure document, providing material information to the franchisee, and informing franchisees of their right to terminate the franchise agreement. Failure to comply with the Washington Franchise Act could result in criminal and/or civil penalties. Overall, franchise law in Washington requires franchisors to have certain reporting obligations. This includes the responsibility to produce an FDD, financial statements, and other post-sale material information. They must also abide by the Washington Franchise Act or risk potential fines or other penalties.

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What are the reporting obligations of franchisors?

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