Washington compliance for franchises

Washington Franchise Investment Protection Act (RCW 19.100) governs franchise offerings in Washington, with the DFI (Division of Securities) administering registration and enforcement. Washington is a franchise registration state—franchisors must register their offerings before selling in Washington, unless an exemption applies.

Filings are made through the DFI e-File portal. Initial registrations must be filed at least 15 business days before the offering is effective, are valid for one year, and require renewal.

The initial registration fee is typically $600, with a $100 fee for renewal or amendment. Required documents include a Franchise Registration Application (NASAA-style), Franchise Disclosure Document (FDD) (including a Washington addendum if needed), Consent to Service of Process, Salesman Disclosure Forms, advertising materials (filed 5 days prior to use), and accountants' consent to audited financial statements if applicable.

Renewal filings are annual (at least 15 days before expiration), and amendments must be filed "as soon as reasonably possible and in any case, before the further sale of any franchise." Financial safeguards like impound agreements, Guarantee of Performance, surety bond, or deferral of initial fees may be required by the examiner based on the franchisor's financial condition.

Several statutory exemptions exist, such as small-fee offerings (initial fee ≤ $500), sales to accredited investors, certain transfers, and a "big boy" or limited-scope exemption requiring an annual $100 notice filing.

The RCW and Washington addendum impose significant franchisee protections, including limits on termination without good cause, restrictions on unfair buy-back/repurchase provisions, limits on unreasonable non-competes, mandates on fair pricing for required goods/services, protections for renewal, compensation for inventory/goodwill on nonrenewal in certain cases, and potential for treble damages for violations.

Third-party sellers (franchise brokers) must register with the Division. All advertising must be filed with the Division at least five days before use.

Franchisors must also comply with the federal FTC Franchise Rule in addition to Washington's state requirements. Beyond franchise-specific rules, franchises must comply with general Washington business registration and licensing obligations (Secretary of State, WA Department of Revenue, local city licenses).

The Washington DFI Division of Securities provides resources like FAQs, forms, filing links, interpretive statements and a Washington Addendum template. For franchisors entering Washington, a practical compliance checklist includes: Confirming if the arrangement meets Washington's statutory franchise definition and if any exemption applies; Preparing a NASAA-style Franchise Registration Application and current FDD, including the Washington Addendum or conforming the agreement to WA law; Assembling required attachments: Consent to Service of Process, Salesman Disclosure Forms, accountants' consent (if applicable), advertising copies, corporate paperwork, and any required guarantees/impound agreements; Filing initial registration through the DFI e-File portal with the $600 fee, at least 15 business days before offering in WA, allowing time for DFI comments; If relying on an exemption, submitting the required annual notice/form and $100 fee; Filing advertising at least five days before use and submitting amendments for material changes before further sales; Preparing for potential financial conditions imposed by the examiner; Coordinating federal FTC Rule compliance with state registration timing; Registering any franchise brokers and ensuring local business licensing, WA Department of Revenue registration, and city business license compliance; Maintaining a renewal calendar for annual renewals (typically 15 days before expiration, $100 fee); Consulting experienced franchise counsel for drafting the Washington Addendum, confirming exemptions, preparing financial exhibits, and responding to DFI analyst comments.

Washington Franchise Investment Protection Act (RCW 19.100) governs franchise offerings in Washington, with the DFI (Division of Securities) administering registration and enforcement. Washington is a franchise registration state—franchisors must register their offerings before selling in Washington, unless an exemption applies.

Filings are made through the DFI e-File portal. Initial registrations must be filed at least 15 business days before the offering is effective, are valid for one year, and require renewal.

The initial registration fee is typically $600, with a $100 fee for renewal or amendment. Required documents include a Franchise Registration Application (NASAA-style), Franchise Disclosure Document (FDD) (including a Washington addendum if needed), Consent to Service of Process, Salesman Disclosure Forms, advertising materials (filed 5 days prior to use), and accountants' consent to audited financial statements if applicable.

Renewal filings are annual (at least 15 days before expiration), and amendments must be filed "as soon as reasonably possible and in any case, before the further sale of any franchise." Financial safeguards like impound agreements, Guarantee of Performance, surety bond, or deferral of initial fees may be required by the examiner based on the franchisor's financial condition.

Several statutory exemptions exist, such as small-fee offerings (initial fee ≤ $500), sales to accredited investors, certain transfers, and a "big boy" or limited-scope exemption requiring an annual $100 notice filing.

The RCW and Washington addendum impose significant franchisee protections, including limits on termination without good cause, restrictions on unfair buy-back/repurchase provisions, limits on unreasonable non-competes, mandates on fair pricing for required goods/services, protections for renewal, compensation for inventory/goodwill on nonrenewal in certain cases, and potential for treble damages for violations.

Third-party sellers (franchise brokers) must register with the Division. All advertising must be filed with the Division at least five days before use.

Franchisors must also comply with the federal FTC Franchise Rule in addition to Washington's state requirements. Beyond franchise-specific rules, franchises must comply with general Washington business registration and licensing obligations (Secretary of State, WA Department of Revenue, local city licenses).

The Washington DFI Division of Securities provides resources like FAQs, forms, filing links, interpretive statements and a Washington Addendum template. For franchisors entering Washington, a practical compliance checklist includes: Confirming if the arrangement meets Washington's statutory franchise definition and if any exemption applies; Preparing a NASAA-style Franchise Registration Application and current FDD, including the Washington Addendum or conforming the agreement to WA law; Assembling required attachments: Consent to Service of Process, Salesman Disclosure Forms, accountants' consent (if applicable), advertising copies, corporate paperwork, and any required guarantees/impound agreements; Filing initial registration through the DFI e-File portal with the $600 fee, at least 15 business days before offering in WA, allowing time for DFI comments; If relying on an exemption, submitting the required annual notice/form and $100 fee; Filing advertising at least five days before use and submitting amendments for material changes before further sales; Preparing for potential financial conditions imposed by the examiner; Coordinating federal FTC Rule compliance with state registration timing; Registering any franchise brokers and ensuring local business licensing, WA Department of Revenue registration, and city business license compliance; Maintaining a renewal calendar for annual renewals (typically 15 days before expiration, $100 fee); Consulting experienced franchise counsel for drafting the Washington Addendum, confirming exemptions, preparing financial exhibits, and responding to DFI analyst comments.