Franchise Approval Tracking
Visualize Compliance
A franchise opportunity can only be offered through disclosure of a franchise disclosure document (the “FDD”). The FDD is the primary legal document required by all franchisors in all states. This document must be renewed annual and many states regulate the offer and sell of franchises to various degrees.
Unfortunately, accurately tracking franchise approval can prove to be a difficult task. Relaying the approval status to sales representatives can be even more difficult.
Zors simplifies franchise approval tracking.
Example of our territory mapping software with the “approvals” layer enabled.
States Regulate the Offer and Sale of Franchise Opportunities
Federal law applies in all states; however, each state can supplement law through laws, rules, and regulations.
Understanding state franchise laws is essentially when planning to franchise, in terms of budgeting, operations, and compliance. Obtaining state approval is an indespensible part of franchising on a nationwide level.
There are 5 separate categories commonly used in franchising to describe the degree of regulation deployed by a particular state.
Franchise Registration States
In franchise registration states, a franchisor must generally submit application materials and obtain regulators approval before offering any franchise opportunities on an annual basis. This means the approval status can change each year on expiration and renewal. In some cases, there are blackout periods where franchisors cannot sell in these states.
Registration states where approval tracking is most important include California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
Annual Filing States
In annual filing states, a franchisor can offer and sale franchises in with a valid FDD if they file an annual notice. The approval status will change if a renewal is not timely filed. Florida and Utah are annual filing states.
One-time Filing States
In one-time filing states, a franchisor can offer and sale franchises in perpetuity (subject to changes in state law) with a valid FDD after they file a one-time notice. One-time filing states to track include Connecticut, Kentucky, Nebraska, and Texas.
Business Opportunity States
In business opportunity states, franchisors must register as a business opportunity unless they have a federally registered trademark or another exemption applies. If the franchisor lacks a registered trademark or does not meet an exemption, then these states impose similar requirements as franchise registration states and the status can change annually. Business opportunity states that are not also franchise registration or one-time filing states include Georgia, Louisiana, Maine, North Carolina, and South Carolina
Non-registration States
In non-registration states, a franchisor can offer and sale franchises on a valid FDD without obtaining any state approval. The franchisor simply needs to ensure they have a valid disclosure document each year within 120 days of the fiscal year end.
Generally, a franchisor with a valid FDD can offer franchises in the following states: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, District of Columbia, Idaho, Iowa, Kansas, Massachusetts, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, West Virginia, and Wyoming.
Tracking Approval State-by-State
Keeping track of each states requirements and approval status is an indispensable part of franchising. While it seem simple on the surface, it can be an overwhelming process. A franchisors ability to offer franchises at any particular time can prove challenging with the legal nuances and intricacies of state laws.
Historically, attorneys provide a state-by-state list or use a platform like Monday. It does the job, but its easy to misplace a document or a link. Conversely, its easy to look at a prior version of a document, and the whole process takes time.
Zors Displays Approval Status on a Territory Map
Zors makes tracking approvals easy, with a built in map layer that can be toggled off and on. The franchisors admin or attorney can update approvals and set expiration dates. These will be displayed at the state level, allowing the team to instantly visualize approval. Since this is built into territory mapping platforms, reps can also easily see if a territory is available and view any nearby franchisees.
The franchise approval map layer is one of the key features of our territory mapping software.
Map Access
Since Zors provides unlimited seats, franchisors can share account access to inside and outside sales representatives. Franchisors can limit a users rights to view-only to protect their data while avoid unnecessary territory checks, demonstrating value, and expediting the sales process.
Updates to the Franchise Approval Map
Approval can be toggled off and on by anyone with admin level access. Franchisor business leads can take on this responsibility, or delegate to their franchise attorney. Approval is tied to a date, which triggers a change from Green, to yellow, to red as expiration approaches.
