Colorado Franchise Registration
There is a reason why Colorado is one of the fastest-growing states in the US and among the states that offer a fantastic quality of life. With a yearly population growth rate of 1.85 percent since 2010, the Centennial state has progressive policies, an abundance of outdoor activities, and stunning natural beauty, attracting multitudes and businesses. However, as franchised businesses expand in the state, it is vital to familiarize yourself with what the law requires of you before franchising, especially with the United States having many different regulations regarding franchising.
Colorado is considered a non-registration state, unlike most states in the country, meaning you don’t have to inform the state of any intent in offering or selling franchises. There are no business opportunity laws enacted, which rule out business opportunity registration; however, despite the state’s franchise law being non-registration, compliance with the federal franchise laws put in place by the Federal Trade Commission (FTC) is compulsory. What this means is, you are required to provide a current copy of the Franchise Disclosure Document to anyone intending to purchase the franchise from you, fourteen days before the actual selling date.
As a franchise business, you are expected by the FTC to have and maintain an updated Franchise Disclosure Document (FDD) that discloses relevant information regarding the franchise to the franchisee. The report usually found in the Franchise Disclosure Document includes but is not limited to affiliates, territory size, royalties, and sale of the franchise.
Colorado has a database that all new businesses can access to determine whether other companies have identical trade names, which helps when moving or starting a business. Although the state is a non-register, you must file your business’s formation documents with the Secretary of State, which is only done online.
All franchisees need to submit the Article of Incorporation and a $50 filing fee as a corporation. The next step involves acquiring an Employer Identification Number (EIN), also known as a Federal Tax ID Number, which the IRS uses to identify your business. All types of businesses in Colorado are expected to register with the Colorado Department of Revenue by filling Colorado Form 112.
The state offers both personal income tax and corporate a flat tax rate of 4.63%, increasing tax calculation obligations. Therefore, getting registered is crucial for tax purposes and ensures your business receives the recommended permits or licenses. Since many different licenses and permits are specific to various businesses, the Division of Professions and Occupations offers pertinent information on the requirements for certain businesses.
If you are not sure how to get your franchise registered in Colorado, you can get all the relevant guidelines from the Colorado Small Business Navigator. However, an easier way of determining your license requirements that saves time is through IncFile.
For more information on how to register your franchise in (Colorado), visit the Franchise Marketing Systems site: www.FMSFranchise.com/about-franchising/guidelines/stateregulations