Franchises are a popular business model in California and other states. Franchises offer a business investor the opportunity to expand to other areas, making the brand more recognizable to customers. As the owner of a franchise, the franchisor has much to consider when deciding when and where to expand their brand. By understanding how franchising works, one can decide whether franchising is the right business decision based on one’s goals and resources.
Required documentation
When franchising in California, the franchisor must first file an application for registration in the state. This application must include the filing fee of $675, a cover letter with identifying information for the franchise, a signed and notarized signature page, and other pertinent forms relevant to the operation of the franchise. The applicant must include financial statements that have been audited by an independent certified public accountant.
If there are no issues with the application, it automatically becomes effective on the 30th business day after the application was filed. Franchisors are permitted to make changes to an application by filing an amendment application with the Department of Financial Protection and Innovation. Franchisors must submit a renewal application before the original registration expires.
Legal advice for franchisors
Franchising can be an effective way to expand one’s business into different areas and gain brand recognition with new customers. However, even the most experienced business-minded individual may have questions or concerns about franchising. California business owners who wish to start franchising can benefit from working with a legal team that understands the state’s laws.
