Certain states require you to pre-file advertising materials and wait a specified time before using them in the state. Some states require that you register your franchise offering before you can advertise it.
Which states require you to pre-file advertising materials?
You must submit franchise advertising before it is used in 6 states, and the advertising must be on file for 3 to 7 days to give state examiners time to review and comment:
California - 3 business days
Maryland - 7 business days
Minnesota - 5 business days
New York - 7 calendar days
North Dakota - 5 business days
Washington - 7 calendar days
If you don’t hear back from the state within these time frames, you can start using the advertisements in that state. You may also want to contact the examiner to confirm that the advertising filing was received.
There is no filing fee to pre-file advertising materials.
Are there any other states with rules on advertising?
In addition to the 6 pre-filing states about, there are also 14 states require a filing before you can advertise in the state (i.e. registration or notice filing):
Registration: Hawaii, Illinois, Indiana, Michigan, Rhode Island, South Dakota, Virginia & Wisconsin
Notice Filing: Connecticut, Florida, Kentucky, Nebraska, Texas & Utah
And don’t forget: every state requires that you first have a finalized FDD that complies with the FTC Rule before advertising.
Is there an exception for internet advertisements?
Internet advertisements and company websites are exempt from the pre-filing requirement if you meet certain requirements:
· You disclose the website URL on the cover page of your registered FDD or file a notice with the state within 5 days of publishing the internet advertisement, and
· The advertising is not directed to any person in the state.
What disclaimers do I need to include on my advertisements?
Your advertising materials needs to include a disclaimer. The disclaimer should be customized to the content of your advertisement and the states where you are using it. Below are some example disclaimers:
General Disclaimer
“This advertisement is not an offering. An offering can only be made by a Franchise Disclosure Document filed with the referenced state, which filing does not constitute approval. [FRANCHISE] franchises will not be sold to any resident of any such jurisdiction until the offering has been exempted from the requirements of, or duly registered in and approved by, such jurisdiction and the required Franchise Disclosure Document has been delivered to the prospective franchisee before the sale in compliance with applicable law. The following states regulate the offer and sale of franchises: CA, HI, IN, IL, MD, MI, MN, NY, ND, RI, SD, VA, WA and WI. If you reside in one of these states, you may have certain rights under applicable franchise laws.”
State-Specific Disclaimers and Franchisor Information
Some states require specific disclaimers or information to be included in advertisements as follows:
In California: Include this language: THIS FRANCHISE HAS BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE COMMISSIONER OF BUSINESS OVERSIGHT NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE, AND NOT MISLEADING.
In Maryland: You must include the franchisor’s name, address, and phone number.
In Minnesota: You must include the franchisor’s name, address, telephone number, and state registration number.
In New York: Include this language: THIS ADVERTISEMENT IS NOT AN OFFERING. AN OFFERING CAN ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. SUCH FILING DOES NOT CONSTITUTE APPROVAL BY THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK.
Disclaimer for Using Financial Performance Representations
“[Gross revenues/net profit/etc.] figures based on unaudited financial information as submitted by franchisees operating from [DATE] to [DATE] and as published in Item 19 of our [ISSUANCE DATE] Franchise Disclosure Document (FDD). As of [DATE] there were [NUMBER] [FRANCHISE] outlets in operation. Some outlets have sold/earned this amount. Your individual results may differ. There is no assurance that you’ll sell/earn as much. Written substantiation for the financial performance representation will be made available to the prospective franchisee upon reasonable request. See Item 19 of our [ISSUANCE DATE] FDD for a definition of gross revenues and for further information.”
Keep in mind that if you want to include earning claims in your advertisements, you can only include figures that already appear in Item 19 of your FDD, without any alteration.
We’d recommend you always first send your advertising materials to a franchise attorney for review, even if you aren’t using them in a pre-submission state. This helps to avoid inadvertently saying something illegal or that you’ll later regret.