Registration or Filing Required?
Yes (Registration)

Business Opportunity Laws?

New York is a franchise registration state and a franchisor must register its FDD with the New State Department of Law Investor Protection Bureau prior to offering or selling franchises in the state or to New York residents. New York charges a $750 fee for the initial registration application and a $150 fee for renewal applications, which must be done annually within 120 days of the franchisor’s fiscal year end. New York only allows registration to be submitted via NASAA’s Electronic Filing Depository which only accepts ACH payments for fees and includes an additional cost for filing.

The New York Franchise Sales Act defines a franchise as an agreement in which a franchisee is granted the right to offer, sell or distribute goods or services under a marketing plan or system prescribed by a franchisor, and the franchisee is required to pay a franchise fee. The definition also includes agreements in which the franchisee pays a franchise fee and is granted the right to offer, sell or distribute goods or services associated with the franchisor’s trademark, service mark or other commercial symbol. The definition of “franchise” in New York is much broader than under the federal guidelines.

The Act governs all franchise sale activity that takes place in New York, and this has been construed to include all offers or sales of franchises consummated in, emanating from, or directed to New York. Franchisors that are not registered in New York must proceed with caution when advertising the sale of their franchises online, as those may constitute an illegal offer when viewed by a prospective franchisee in New York.

Once effective, you must renew your registration every year and must submit your renewal application and all required documents within 120 days from the end of your fiscal year. If you do not submit your renewal application on time, you may have to file a new initial registration application.

For renewal applications, you must submit also submit information regarding your sales from the previous year including the name and address of each franchise sold, the date of the sale, and the price paid by the franchisee or the credit terms for the sale.

Franchisors must also file amendments to their registrations promptly after material changes are made to its FDD. An amendment application must contain required forms one clean copy of your FDD and one redlined copy showing the changes, and the $150 amendment fee. The state provides some examples of what it considers to be material changes, including:

  1. The termination or non-renewal of 10 or 10% of the franchise locations during a 3-month period.
  2. The franchisor purchasing more than 5% of its franchises in a 6-month period.
  3. A change in franchise fees charged.
  4. Any significant adverse change to the business condition of the franchisor.

We can assist you in registration and staying compliant in New York.