West Virginia Franchise Registration
The state has one of the best business climates in the United States, with more than $5 billion in business investment. West Virginia has a diverse economy, including a wide array of services and products, ensuring that businesses expanding there benefit from the available opportunities. West Virginia’s corporate income tax rate is 6.5% lower than, helping enterprises save close to $53 million annually in tax savings. In addition, the state has eliminated its business franchise tax and reduced workers’ compensation rates which saves employees a lot of money. These are some of the key factors which attract businesses in the state.
West Virginia is among the non-registration states, which means it does not have a specific franchise. This means that a franchisor is not required to register or file with the state before offering or selling a franchise. However, although the state does not have specific franchise laws, friendship laws, or business opportunity laws, franchisors must comply with Federal Trade Commission Amended Rule (FTC Rule).
The FTC Rule stipulates the requirements franchisors need to meet before offering or selling a franchise location in West Virginia. The purpose of the franchise laws is to protect the franchisee and the franchisor during the transaction. Accordingly, the Federal Trade Commission Amended Rule requires franchisors to prepare and maintain an updated Franchise Disclosure Document, which must be presented to the franchisee 14 days before the actual sale date.
The Franchise Disclosure Document is essential because it discloses various critical aspects of the business before purchasing to prospective buyers. The FDD contains several topics, 23 to be exact, which shine a light on what the company is about. These topics address franchise cost, territory information, financial information, business owner, and other critical areas. This document must be accurate and up to date.
Regardless of the state, you are franchising your business, it is vital to ensure that you comply with the Federal Trade Commission Amended Rule. Consulting a professional franchise attorney helps with compliance with the franchise laws at the federal and state level. In addition, if you intend to franchise your business in West Virginia, the State Tax Department provides you with the necessary information needed to get you started.
The Franchise Disclosure Document (FDD) needs to be carefully drafted to incorporate all the crucial information about the business. This is mandatory according to federal franchise laws to protect both the franchisor and the franchisee. A franchise attorney not only provides legal counsel but also helps in drafting the Franchise Disclosure Document.
Since the franchisor is mandated by law to have a well-drafted and updated FDD, working with a lawyer helps you operate within the legal framework. It is advisable to familiarize yourself with the franchise laws at both the federal and state levels to avoid fines and penalties, which are pretty costly.
For more information on how to register your franchise in West Virginia, visit the Franchise Marketing Systems site: https://www.fmsfranchise.com/learn/resources/state-guidelines/