Franchise Prospector » Franchise & Small Business Resources

States that Regulate Franchise and Business Opportunities

Franchise & Small Business Resources

When deciding on becoming a franchisee, there is a wide variety of factors to consider. Before going very far into negotiations with any particular franchisors it is quite advisable to look into the credibility of the company. There are many scams afloat today - even with the extensive governmental regulations that have been applied to curb fraud - and so finding out all of the important warning signs is quite important. Individuals or groups that falsely represent themselves in order to con investors out of their precious capital have resorted to countless different tricks.

But while fraudulent practices come in many different forms there is one which is especially worth looking out for. Indeed, a company that has a perfectly polished image, does everything on paper, has a normal business facade etc. can still be ducking through a legitimacy loophole that the new franchisee can easily look over. That's because there are about 15 different states which require franchise organizations to register specifically as such. If a franchisor is not up to snuff in all of its business practices, it may consider avoiding the state registration requirement so as not to get detected that easily by the government.

Now, there are two ways in which a franchise company can get around these this registration requirement. The first is simple, and is done by simply not registering. However, if a franchisee sees that the company has not registered in a state that requires registration, it is important for the investor to ask why. That's because there are certain franchises that are exempted from having to register in certain states that normally require it. This is perfectly legal and depends on various factors. Don't turn the franchisor down just yet until the reason for not registering becomes clear.

The second method for a franchise company to avoid registration ensures better chances of them not getting caught by the government. This strategy depends on the fact that only 15 states require registration. If a company is developing franchisee locations in areas that span at least a few different states, but the list is conspicuously lacking any of the 15 franchise registration states, it is probably a good idea to look a little further into the matter. Before becoming immediately suspicious, however, it might be a good idea to realize that a lot of franchises exist in areas of the country that happen not to run into any states that require registration. This could just as easily be a sign of legitimacy as it could be one of fraudulence, and they franchisee may still want to investigate a little further just to be sure of the validity of the franchisor company.

Yet when it becomes obvious that a company is actively seeking to avoid having to register by developing areas that appear to be drawn out solely for the purpose of avoiding certain registration states, this signals trouble. Check up on the franchisor early on in the process in order to not waste too much time with a company that is not worth the investment.

The following is a list of franchise requirement states and their appropriate government addresses:

New York
New York State Department of Law
Bureau of Investor Protection and Securities
120 Broadway, 23rd Floor New York, NY 10271

California
California Department of Corporations
The Commissioner of Corporations
Department of Corporations
320 West 4th Street Los Angeles, CA 90013

Illinois
Franchise Division Office of the Attorney General
Chief, Franchise Division
Office of the Attorney General
500 South Second Street Springfield, IL 62706

Hawaii
Business Registration Division
Securities Compliance
Department of Commerce and Consumer Affairs
1010 Richards Street Honolulu, HI 96813

Rhode Island
Rhode Island Division of Securities
Director, Division of Securities
233 Richmond Street, Suite 232 Providence, RI 02903

Michigan
Antitrust and Franchise Unit
Department of the Attorney General
Director, Consumer Protection Division
670 Law Building Lansing, MI 48913

Indiana
Securities Commissioner
Indiana Securities Division
Room E 111, 302 West Washington Street Indianapolis, IN 46204

Minnesota
The Commissioner of Commerce
Minnesota Department of Commerce
85 7th Place East, Suite 500 St. Paul, MN 55101-2198

Virginia
State Corporation Commission
Division of Securities and Retail Franchising
1300 East Main Street, 9th Floor Richmond, VA 23219

Maryland
Office of the Attorney General
Securities Division
200 St. Paul Place, 20th Floor Baltimore, MD 21202-2020

North Dakota
The Commissioner of Securities
North Dakota Office of Securities Commissioner
Office of the Securities Commissioner
600 East Boulevard, Fifth Floor Bismarck, ND 58505

South Dakota
South Dakota Division of Securities
Director, Division of Securities
118 West Capitol Pierre, SD 57501

Wisconsin
The Commissioner of Securities
Wisconsin Securities Commission
P.O. Box 1768 Madison, WI 53701

Washington
Department of Financial Institutions
Securities Division
P.O. Box 9033 Olympia, WA 98507-9033