The Maryland Securities Division is now offering a Fast Track FDD Renewal Process for franchisors who can meet early deadlines and eligibility requirements. Other states are likely to follow.
The Maryland Securities Division ("Division") is, for the first time, offering a Fast-Track Franchise Renewal Program in an effort to streamline the franchise registration renewal process. Franchisors will be allowed to submit their updated Franchise Disclosure Documents ("FDD") without financial statements and an audit report and to respond to comment letters if they meet certain eligibility requirements and deadlines.
The requirements and deadlines are relatively straightforward:
By February 1, franchisors participating in the Fast-Track Franchise Renewal Program must submit:
- A cover letter opting into the Fast-Track Program.
- All renewal forms excluding Form F and the certification section of Form A.
- A full clean Franchise Disclosure Document (FDD) without financial statements or an audit report.
- A marked FDD blacklined against the currently registered version.
- $250 franchise renewal fee.
By April 10, participating franchisors must submit:
- Full clean completed renewal FDD that includes audited financial statements and consistent issuance dates.
- Marked pages blacklined against the last reviewed version.
- Consent of Accountant (Form F).
- Certification section of Form A.
Eligibility Requirements
- The franchisor’s FDD must be currently registered in Maryland (the program is only available for renewals).
- The franchisor’s fiscal year-end must fall between December 24 and January 7.
- The franchise must not be currently subject to a pending investigations or enforcement matters.
- The division may reject or remove filings from the program in its discretion.
Review Process: Significant Material Changes
The Division may reject or remove filings from the program in its discretion. The attorneys represented that these decisions will be based upon whether or not there are significant material changes made to the FDD. If there are a significant number of changes made, the Division may remove the FDD from the program and require compliance with the standard rules.
Takeaways
This program provides an opportunity for franchisors to get to the head of the line by having their FDD (absent financial statements and an audit) ready to go by February 1. The Division will review and provide comments while the audit report is being prepared. Hopefully, the other comments and revisions can be completed while the audit report is being prepared and the timeline to get registered in Maryland will shorten -- maybe dramatically.
If this program is effective in Maryland, it is possible that other states that require registration will follow. To the extent that you are interested in participating, please reach out to Josh Becker at josh.becker@gknet.com and Marina Towles at marina.towles@gknet.com.
about our attorney
Joshua Becker is a shareholder and forward-thinking adviser who anticipates how to best position his clients relative to regulatory changes, evolving market conditions, and the competitive landscape. Josh's proactive approach to problem-solving adds real value for the clients he serves.
He brings 18 years of experience in franchising and intellectual property law to clients that include companies of all sizes from a myriad of industries, among them established and fast-growth franchisors, technology development companies, service providers, and distributors.