Washington Franchise Registration

Washington Franchise Registration

Every state within the U.S. has varying degrees of regulation for franchises. Washington state is a great place to set up shop. For starters, its pro-business climate and tax incentives are well worth the regulations. Washington has a large market ripe with opportunity for franchisors. Seattle is home to several tech giants, such as Amazon, Zulily, RedFin and Tableau. According to data from the Bureau of Labor and Statistics, the average tech employee was earning an average annualized salary of over $279K by Q3 of 2019, outpacing other states such as New York. As tech competition grows, more and more companies are enticing employees with higher compensation and dense benefit packages. An estimated 530,000+ veterans call Washington state home, and there are seven military bases in the Seattle area. The total state population tops an estimated 7.8 million residents, with 3.5 million living in the greater Seattle area. Add in the perks that it’s a central export hub, houses top-market pro sports teams the Seattle Mariners and the Seattle Seahawks, is home to robust supply chains and warehouses, and its recent launch of a $16 billion 2020 local transportation revamp, and you’re in business! 

The Basics:

Since Washington state is a Franchise Registration State, you will need 3 things to sell your franchise in Washington state:

1. Filing
2. Fee
3. Approval

Remember, regulations can change anytime, so be sure to check in with Washington’s franchise information page to see the most up-to-date information.

Let’s Break it Down… 

Every franchisor must register with the Securities Division of the Washington State Department of Financial Institutions prior to the selling of any units. When initially registering your franchise in Washington state, there are six things you will need:

1. Franchise Registration Application: Includes Consent to Service of Process, Signature page, Cost and Source of Funds, and Corporate, Individual or Partnership Acknowledgment
2. Franchise Disclosure Document (FDD): Includes Washington State addendum. Item 21 will need audited financial statements.
3. Salesman Disclosure Form: For anyone within the organization selling the franchise. If the seller is a third party, they will need to be a registered Franchise Broker.
4. Initial Washington Franchise Registration Fee: $600 initial filing (checks made payable to Washington State Treasurer)
5. Photocopies of audited financial statements must have consent from the accountants who prepared them.
6. Advertising: Needs to have approval at least five days prior to use.
8. Every franchisor must renew the Washington Franchise registration annually. Annual renewal needs to be underway no later than 15 days before your current registration’s expiration. Washington keeps the annual renewal process simple. Here’s what you will need:

1. Franchise Registration Application: Only the first page. Check the “Renewal Box”, Signature Page, Cost and Source of Funds.
2. Franchise Disclosure Document (FDD): Two copies are needed for renewal. Keep one unmarked with the second copy showing any new changes.
3. Salesman Disclosure Form: Same stipulations as the initial form.
4. Annual Renewal Fee: $100 renewal fee.
5. Consent of Accountants: Same as initial registration.
6. Advertising: Includes any new ads franchisor will be using.

At times, amendments are needed. Why amend? Washington’s FIPA states that any material change within the FDD in the condition of the franchisor, sub-franchisor, or the information necessitates an amendment. The amendment fee is $100.

Financial specifics are overviewed by a state analyst. On a case by case basis a Guarantee of Performance or a Franchise Impound Agreement may be needed. This is to ensure that a franchisor isn’t using a franchise fee as working capital within their own operations.

The Securities Division of the Washington State Department of Financial Institutions is who enforces Washington’s Franchise Investment Protection Act (FIPA). This document details all franchise laws within the state.

What’s Next?

With the above items in hand, you are ready to register, renew, or amend your FDD with Washington State. Here’s their general contact info:

            Washington State Department of Financial Institutions, Securities Division

Phone: 360-902-8700

Mailing Address: P.O. Box 41200, Olympia, WA 98504

            Email: [email protected] 

• All facts and figures pulled from Census.gov, Statista.com, BLS.gov
• Details for registration are from https://dfi.wa.gov/franchises/faqs