SCC Encourages Virginians to Do Their Homework Before Purchasing a Franchise Business
SEP 27, 2023
RICHMOND – From fast food and fitness to real estate, home improvement and auto repair, franchises offer something for almost any business interest. Buying and operating a franchise business can require a substantial commitment of time and money. For this reason, the State Corporation Commission’s (SCC) Division of Securities and Retail Franchising (Division) encourages Virginians who are considering buying a franchise to educate themselves before they buy.
“Assess your financial resources, abilities and goals and thoroughly understand franchise disclosures and your rights,” said Division Director Doug Joyce.
A franchisor must provide each prospective franchisee with a detailed Franchise Disclosure Document (FDD) at least 14 days before they invest in that franchise business. Required by federal and Virginia laws, the FDD consists of 23 specific items of information, including: the history of the franchise being offered; information about its officers and directors; costs to the franchisee; obligations of the franchisor and franchisee; financial statements; restrictions; franchisor operating practices, and renewal, termination or transfer of a franchise. Joyce encourages prospective franchisees to read the FDD thoroughly and make sure they fully understand it before they buy a franchise business.
Franchisors are required to register franchises operated in Virginia with the Division before offering or selling them to the public. Alternatively, some franchises may qualify for an exemption from registration. To find out if a franchise is registered in Virginia, contact the Division at 804-371-9051 in Richmond or toll-free at 1-800-552-7945 or visit its website at scc.virginia.gov/RegSearches#FRANCHISE.
Additional franchising resources are available on the North American Securities Administrators Association (NASAA) website at nasaa.org/industry-resources/franchise-resources/.
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