Iowa Franchise Registration
Iowa is rated as one of the top places in the United States to operate a business due to its quality of life amenities and a vast pool of educated workers. Aside from the state’s high labor force participation in the country, it exempts the purchase of machinery and equipment used in manufacturing from sales and use taxes. In addition, Iowa corporate tax offers businesses significant advantages like reduced corporate income tax and a 50% deduction on federal taxes from the state’s corporate income tax. Business owners are also exempted from personal property tax on raw materials, inventories of finished goods, and goods-in-process making it a business-friendly environment for all considering relocating, reinvesting, or starting a business in Iowa.
Iowa is among the non-registration states in the country, meaning you are not required to register or have documents reviewed by the state before selling or offering your franchise. Although the state has not enacted specific franchise laws, there are Business Opportunity Laws. Franchisors who comply with the Federal Trade Commission’s Franchise Rule have the opportunity of filing an exemption notice from the state’s business opportunity law.
According to Iowa’s General Business Opportunity Law chapter 551.A.4, a franchisor can only file for an exemption if the Franchise Disclosure Document (FDD) presented to the franchisee is updated during their first meeting or 14 days before the actual sale date. Since Iowa does not have specific state franchise laws, federal franchise laws stipulated by the Federal Trade Commission are applicable for all who consider franchising in the state. The FTC Federal Franchise Rule mandates all franchisors to provide prospective franchisees with a well-prepared and updated Franchise Disclosure Document, which avails all the pertinent information regarding the franchise opportunity.
Under the General Business Opportunity Law chapter 551.A.4(b), franchisors are exempted from the liabilities and duties imposed on business opportunity sellers if they provide the prospect franchisee a franchise offering circular prepared according to the North American Securities Administrators Association (NASAA). Therefore, it is advisable to consult a professional franchise lawyer if you intend to franchise in Iowa to ensure that your FDD is well prepared according to FTC Federal Franchise Rule and the NASAA.
Failure to comply with the FTC federal franchise rule by providing a prospective buyer with a Franchise Disclosure Document that is not current or does not contain all the relevant information about the franchise before accepting payment or entering into a franchise agreement may result in costly fines. This means that you will not be exempted from the Business Opportunity Law enacted by the state of Iowa.
Since franchise and Business Opportunity Laws differ from one state to another, a franchise lawyer can help you avoid penalties that result from infringement of these pretty expensive laws. Take time to learn about the different franchising laws at the state and federal levels for a successful franchising venture.
For more information on how to register your franchise in Iowa, visit the Franchise Marketing Systems site: https://www.fmsfranchise.com/learn/resources/state-guidelines/