FRANCHISING IN HAWAII
Registration or Filing Required?
Yes (Registration)
Business Opportunity Laws?
Yes
Hawaii is a franchise registration state. Before you offer or sell a franchise in Hawaii you must register your FDD with the Business Registration Division of the Hawaii State Dept. of Commerce and Consumer Affairs. The filing fee for initial FDD registrations, updates and annual renewals is $250 per filing. Registration lasts for one year and must be updated no less frequently than annually and within 120 days of the close of your fiscal year.
The Hawaii Franchise Investment Law governs and regulates the offer and sale of franchises in the State of Hawaii. The franchise registration application should include: the filing fee of $250 payable to the “Commissioner of Securities”; a cover letter clearly stating the name of the applicant, the enclosed documents, the fiscal year of the applicant, and an acknowledgment that the franchise filing will “expire three months after the fiscal year end”; Hawaii State Specific Application for Filing Franchise Offering Circular; the Uniform Franchise Registration Application with Certification form; and the Consent to Service of Process; a Corporate Acknowledgment; a Franchise Seller Disclosure Form; Franchisor’s Costs and Source of Funds Form; and one complete hard copy of the FDD.
The filing fee is $200 for all franchise registration applications including initial registrations, renewal registrations and FDD amendments.Section 482E-2 of the Hawaii Franchise Investment Law applies a community of interest standard and defines a franchise, as:
- “an oral or written contract or agreement, either expressed or implied, in which a person grants to another person, a license to use a trade name, service mark, trademark, logotype, or related characteristic in which there is a community of interest in the business of offering, selling, or distributing goods or services at wholesale or retail, leasing, or otherwise, and in which the franchisee is required to pay, directly or indirectly, a franchise fee.”
There are limited exemptions to Hawaii’s franchise registration requirements to discuss with your franchise lawyer. Section 482E-4 of the Hawaii Franchise Investment Law identifies, Hawaii’s registration exemptions, which include: motor vehicle franchises; out of state transactions where the offer and sale of the franchise relates to a prospective franchisee domiciled outside Hawaii and where the franchised outlet will be located outside Hawaii; the extension or renewal of an existing franchise or the substitution of a modified or amended franchise agreement where there is no interruption in the operation of the franchise business of the franchisee and where there is no material change in the franchise relationship; the transfer of the location of a franchisee where there is no interruption in the operation of the franchise business of the franchisee and where there is no material change in the franchise relationship; and the offer or sale of an additional franchise to an existing franchisee of the same system.