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To help you evaluate whether owning a franchise is right for you, the Federal Trade Commission has prepared this booklet. It will help you understand your obligations as a franchise owner, how to shop for franchise opportunities, and how to ask the right questions before you invest.
A franchise typically enables you, the investor or "franchisee," to operate a business. By paying a franchise fee, which may cost several thousand dollars, you are given a format or system developed by the company ("franchisor"), the right to use the franchisor's name for a limited time, and assistance. For example, the franchisor may help you find a location for your outlet; provide initial training and an operating manual; and advise you on management, marketing, or personnel. Some franchisors offer ongoing support such as monthly newsletters, a toll free 800 telephone number for technical assistance, and periodic workshops or seminars.
While buying a franchise may reduce your investment risk by enabling you to associate with an established company, it can be costly. You also may be required to relinquish significant control over your business, while taking on contractual obligations with the franchisor.
Below is an outline of several components of a typical franchise system. Consider each carefully.
The CostIn exchange for obtaining the right to use the franchisor's name and its assistance, you may pay some or all of the following fees:
ControlsTo ensure uniformity, franchisors typically control how franchisees conduct business. These controls may significantly restrict your ability to exercise your own business judgment. The following are typical examples of such controls:
Terminations and RenewalYou can lose the right to your franchise if you breach the franchise contract. In addition, the franchise contract is for a limited time; there is no guarantee that you will be able to renew it:
Before investing in a particular franchise system, carefully consider how much money you have to invest, your abilities, and your goals. The following checklist may help you make your decision.
Like any other investment, purchasing a franchise is a risk. When selecting a franchise, carefully consider a number of factors, such as the demand for the products or services, likely competition, the franchisor's background, and the level of support you will receive.
Demand Is there a demand for the franchisor's products or services in your community? Is the demand seasonal? For example, lawn and garden care or swimming pool maintenance may be profitable only in the spring or summer. Is there likely to be a continuing demand for the products or services in the future? Is the demand likely to be temporary, such as selling a fad food item? Does the product or service generate repeat business?
Competition What is the level of competition, nationally and in your community? How many franchised and company-owned outlets does the franchisor have in your area? How many competing companies sell the same or similar products or services? Are these competing companies well established, with wide name recognition in your community? Do they offer the same goods and services at the same or lower price?
Your Ability to Operate the Business Sometimes, franchise systems fail. Will you be able to operate your outlet even if the franchisor goes out of business? Will you need the franchisor's ongoing training, advertising, or other assistance to succeed? Will you have access to the same or other suppliers? Could you conduct the business alone if you must lay off personnel to cut costs?
Name Recognition A primary reason for purchasing a franchise is the right to associate with the company's name. The more widely recognized the name, the more likely it will draw customers who know its products or services. Therefore, before purchasing a franchise, consider:
Training and Support Servcies Another reason for purchasing a franchise is to obtain support from the franchisor. What training and ongoing support does the franchisor provide? How does their training compare with the training for typical workers in the industry? Could you compete with others who have more formal training? What backgrounds do the current franchise owners have? Do they have prior technical backgrounds or special training that helps them succeed? Do you have a similar background?
Franchisor's Experience Many franchisors operate well-established companies with years of experience both in selling goods or services and in managing a franchise system. Some franchisors started by operating their own business. There is no guarantee, however, that a successful entrepreneur can successfully manage a franchise system.
Carefully consider how long the franchisor has managed a franchise system. Do you feel comfortable with the franchisor's expertise? If franchisors have little experience in managing a chain of franchises, their promises of guidance, training, and other support may be unreliable.
Growth A growing franchise system increases the franchisor's name recognition and may enable you to attract customers. Growth alone does not ensure successful franchisees; a company that grows too quickly may not be able to support its franchisees with all the promised support services. Make sure the franchisor has sufficient financial assets and staff to support the franchisees.
Attending a franchise exposition allows you to view and compare a variety of franchise possibilities. Keep in mind that exhibitors at the exposition primarily want to sell their franchise systems. Be cautious of salespersons who are interested in selling a franchise that you are not interested in.
Before you attend, research what type of franchise best suits your investment limitations, experience, and goals. When you attend, comparison shop for the opportunity that best suits your needs and ask questions.
Know How Much You Can Invest An exhibitor may tell you how much you can afford to invest or that you can't afford to pass up this opportunity. Before beginning to explore investment options, consider the amount you feel comfortable investing and the maximum amount you can afford.
Know What Type of Business is Right for You An exhibitor may attempt to convince you that an opportunity is perfect for you. Only you can make that determination. Consider the industry that interests you before selecting a specific franchise system. Ask yourself the following questions:
Do you have the necessary background or skills?If the industry does not appeal to you or you are not suited to work in that industry, do not allow an exhibitor to convince you otherwise. Spend your time focusing on those industries that offer a more realistic opportunity.
Comparison Shop Visit several franchise exhibitors engaged in the type of industry that appeals to you. Listen to the exhibitors' presentations and discussions with other interested consumers. Get answers to the following questions:
Exhibitors may offer you prizes, free samples, or free dinners if you attend a promotional meeting later that day or over the next week to discuss the franchise in greater detail. Do not feel compelled to attend. Rather, consider these meetings as one way to acquire more information and to ask additional questions. Be prepared to walk away from any promotion if the franchise does not suit your needs.
Get Substantiation for Any Earnings Representations Some franchisors may tell you how much you can earn if you invest in their franchise system or how current franchisees in their system are performing. Be careful. The FTC requires that franchisors who make such claims provide you with written substantiation. This is explained in more detail in the section "Investigating Franchise Offers." Make sure you ask for and obtain written substantiation for any income projections, or income or profit claims. If the franchisor does not have the required substantiation, or refuses to provide it to you, consider its claims to be suspect.
Take Notes It may be difficult to remember each franchise exhibit. Bring a pad and pen to take notes. Get promotional literature that you can review. Take the exhibitors' business cards so you can contact them later with any additional questions.
Avoid High Pressure Sales Tactics You may be told that the franchisor's offering is limited, that there is only one territory left, or that this is a one-time reduced franchise sales price. Do not feel pressured to make any commitment. Legitimate franchisors expect you to comparison shop and to investigate their offering. A good deal today should be available tomorrow.
Study the Franchisor's Offering Do not sign any contract or make any payment until you have the opportunity to investigate the franchisor's offering thoroughly. As will be explained further in the next section, the FTC's Franchise Rule requires the franchisor to provide you with a disclosure document containing important information about the franchise system. Study the disclosure document. Take time to speak with current and former franchisees about their experiences. Because investing in a franchise can entail a significant investment, you should have an attorney review the disclosure document and franchise contract and have an accountant review the company's financial disclosures.
Before investing in any franchise system, be sure to get a copy of the franchisor's disclosure document. Sometimes this document is called a Franchise Offering Circular. Under the FTC's Franchise Rule, you must receive the document at least 10 business days before you are asked to sign any contract or pay any money to the franchisor. You should read the entire disclosure document. Make sure you understand all of the provisions. The following outline will help you to understand key provisions of typical disclosure documents. It also will help you ask questions about the disclosures. Get a clarification or answer to your concerns before you invest.
Business Background The disclosure document identifies the executives of the franchise system and describes their prior experience. Consider not only their general business background, but their experience in managing a franchise system. Also consider how long they have been with the company. Investing with an inexperienced franchisor may be riskier than investing with an experienced one.
Litigation History The disclosure document helps you assess the background of the franchisor and its executives by requiring the disclosure of prior litigation. The disclosure document tells you if the franchisor, or any of its executive officers, has been convicted of felonies involving, for example, fraud, any violation of franchise law or unfair or deceptive practices law, or are subject to any state or federal injunctions involving similar misconduct. It also will tell you if the franchisor, or any of its executives, has been held liable or settled a civil action involving the franchise relationship. A number of claims against the franchisor may indicate that it has not performed according to its agreements, or, at the very least, that franchisees have been dissatisfied with the franchisor's performance. Be aware that some franchisors may try to conceal an executive's litigation history by removing the individual's name from their disclosure documents.
Bankruptcy The disclosure document tells you if the franchisor or any of its executives have recently been involved in a bankruptcy. This will help you to assess the franchisor's financial stability and general business acumen and predict if the company is financially capable of delivering promised support services.
Costs The disclosure document tells you the costs involved to start one of the company's franchises. It will describe any initial deposit or franchise fee, which may be non-refundable, and costs for initial inventory, signs, equipment, leases, or rentals. Be aware that there may be other undisclosed costs. The following checklist will help you ask about potential costs to you as a franchisee.
It may take several months or longer to get your business started. Consider in your total cost estimate operating expenses for the first year and personal living expenses for up to two years. Compare your estimates with what other franchisees have paid and with competing franchise systems. Perhaps you can get a better deal with another franchisor. An accountant can help you to evaluate this information.
RestrictionsYour franchisor may restrict how you operate your outlet. The disclosure document tells you if the franchisor limits:
Understand that restrictions such as these may significantly limit your ability to exercise your own business judgment in operating your outlet.
Terminations The disclosure document tells you the conditions under which the franchisor may terminate your franchise and your obligations to the franchisor after termination. It also tells you the conditions under which you can renew, sell, or assign your franchise to other parties. Training and Other Assistance The disclosure document will explain the franchisor's training and assistance program. Make sure you understand the level of training offered. The following checklist will help you ask the right questions.
The level of training you need depends on your own business experience and knowledge of the franchisor's goods and services. Keep in mind that a primary reason for investing in the franchise, as opposed to starting your own business, is training and assistance. If you have doubts that the training might be insufficient to handle day-to-day business operations, consider another franchise opportunity more suited to your background.
Advertising You often must contribute a percentage of your income to an advertising fund even if you disagree with how these funds are used. The disclosure document provides information on advertising costs. The following checklist will help you assess whether the franchisor's advertising will benefit you.
Current and Former FranchiseesThe disclosure document provides important information about current and former franchisees. Determine how many franchises are currently operating. A large number of franchisees in your area may mean increased competition. Pay attention to the number of terminated franchisees. A large number of terminated, cancelled, or non-renewed franchises may indicate problems. Be aware that some companies may try to conceal the number of failed franchisees by repurchasing failed outlets and then listing them as company-owned outlets.
If you buy an existing outlet, ask the franchisor how many owners operated that outlet and over what period of time. A number of different owners over a short period of time may indicate that the location is not a profitable one, or that the franchisor has not supported that outlet with promised services.The disclosure document gives you the names and addresses of current franchisees and franchisees who have left the system within the last year. Speaking with current and former franchisees is probably the most reliable way to verify the franchisor's claims. Visit or phone as many of the current and former franchisees as possible. Ask them about their experiences. See for yourself the volume and type of business being done.
The following checklist will help you ask current and former franchisees such questions as:
Be aware that some franchisors may give you a separate reference list of selected franchisees to contact. Be careful. Those on the list may be individuals who are paid by the franchisor to give a good opinion of the company.
Earnings Potential You may want to know how much money you can make if you invest in a particular franchise system. Be careful. Earnings projections can be misleading. Insist upon written substantiation for any earnings projections or suggestions about your potential income or sales.
Franchisors are not required to make earnings claims, but if they do, the FTC's Franchise Rule requires franchisors to have a reasonable basis for these claims and to provide you with a document that substantiates them. This substantiation includes the bases and assumptions upon which these claims are made. Make sure you get and review the earnings claims document. Consider the following in reviewing any earnings claims.
Sample Size. A franchisor may claim that franchisees in its system earned, for example, $50,000 last year. This claim may be deceptive, however, if only a few franchisees earned that income and it does not represent the typical earnings of franchisees. Ask how many franchisees were included in the number.
Average Incomes. A franchisor may claim that the franchisees in its system earn an average income of, for example, $75,000 a year. Average figures like this tell you very little about how each individual franchisee performs. Remember, a few, very successful franchisees can inflate the average. An average figure may make the overall franchise system look more successful than it actually is.
Gross Sales. Some franchisors provide figures for the gross sales revenues of their franchisees. These figures, however, do not tell you anything about the franchisees' actual costs or profits. An outlet with a high gross sales revenue on paper actually may be losing money because of high overhead, rent, and other expenses.
Net Profits. Franchisors often do not have data on net profits of their franchisees. If you do receive net profit statements, ask whether they provide information about company-owned outlets. Company-owned outlets might have lower costs because they can buy equipment, inventory, and other items in larger quantities, or may own, rather than lease their property.
Geographic Relevance. Earnings may vary in different parts of the country. An ice cream store franchise in a southern state, such as Florida, may expect to earn more income than a similar franchise in a northern state, such as Minnesota. If you hear that a franchisee earned a particular income, ask where that franchisee is located.
Franchisee's Background. Keep in mind that franchisees have varying levels of skills and educational backgrounds. Franchisees with advanced technical or business backgrounds can succeed in instances where more typical franchisees cannot. The success of some franchisees is no guarantee that you will be equally successful.
Financial History The disclosure document provides you with important information about the company's financial status, including audited financial statements. Be aware that investing in a financially unstable franchisor is a significant risk; the company may go out of business or into bankruptcy after you have invested your money. Hire a lawyer or an accountant to review the franchisor's financial statements. Do not attempt to extract this important information from the disclosure document unless you have considerable background in these matters. Your lawyer or accountant can help you understand the following:
Before you invest in a franchise system, investigate the franchisor thoroughly. In addition to reading the company's disclosure document and speaking with current and former franchisees, you should speak with the following:
Lawyer and Accountant Investing in a franchise is costly. An accountant can help you understand the company's financial statements, develop a business plan, and assess any earnings projections and the assumptions upon which they are based. An accountant can help you pick a franchise system that is best suited to your investment resources and your goals.
Franchise contracts are usually long and complex. A contract problem that arises after you have signed the contract may be impossible or very expensive to fix. A lawyer will help you to understand your obligations under the contract, so you will not be surprised later. Choose a lawyer who is experienced in franchise matters. It is best to rely upon your own lawyer or accountact, rather than those of the franchisor.
Banks and Other Financial Institutions These organizations may provide an unbiased view of the franchise opportunity you are considering. Your banker should be able to get a Dun and Bradstreet report or similar reports on the franchisor.
Better Business Bureau Check with the local Better Business Bureau (BBB) in the cities where the franchisor has its headquarters. Ask if any consumers have complained about the company's products, services, or personnel.
Government Departments Several states regulate the sale of franchises. Check with your state Division of Securities or Office of Attorney General for more information about your rights as a franchise owner in your state.
To Good To Be TrueIt's easy to see why ads for business opportunities like these appeal to consumers looking to make extra money: They promise good pay for little effort. But, as many consumers who have answered these ads have learned - and the Federal Trade Commission (FTC) has found - many business opportunity promotions are nothing but scams that take consumers' money up front and fail to deliver on the promises. If you're a prospective business owner, what can you do to make sure this doesn't happen to you? First, do your homework, including getting pre-investment information in writing. Under the FTC Franchise Rule, most potential business purchasers have the right to receive information about the earnings potential of a business opportunity. Most legitimate business opportunity promoters don't hesitate to give this information. Second, research other aspects of the business' performance. One way to do that is to personally interview other people who have bought into the program. Could 'Biz Opp' Offers Be Out For Your Coffers? is a free publication from the Federal Trade Commission that can answer your questions and help you ask the right questions. For more information contact Consumer Response Center, Federal Trade Commission, 600 Pennsylvania, NW, H-130, Washington, DC 20580; 877-FTC-HELP; www.ftc.gov/ http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv02.shtm
Know Your RightsA franchise or business opportunity seller must give you a detailed disclosure document at least 10 business days before you pay any money or legally commit yourself to a purchase. You can use these disclosures to compare a particular business with others you may be considering or simply for information. The disclosure document includes:
To learn more request the publication Franchise and Business Opportunities from Consumer Response Center, Federal Trade Commission, 600 Pennsylvania, NW, H-130, Washington, DC 20580; 877-FTC-HELP; www.ftc.gov/; http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv07.shtm
Earn $$$$ From Medical Billing- REALLY?If you're looking for a home-based business that can help you pull in $20,000 to $45,000 a year using your computer, a work-at-home opportunity doing medical billing may sound like the perfect choice. But before you part with your money, consider this: The Federal Trade Commission (FTC) has brought charges against promoters of medical billing opportunities for misrepresenting the earnings potential of their businesses and for failing to provide key pre-investment information required by law. Medical Billing Opportunities: Worth a Second Opinion is a free publication from the FTC that explains how these programs work and what you need to do to protect yourself. To learn more request the publication Medical Billing Opportunities from Consumer Response Center, Federal Trade Commission, 600 Pennsylvania, NW, H-130, Washington, DC 20580; 877-FTC-HELP; www.ftc.gov/; http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv09.shtm
The Internet Business Sounds EasyActually too easy. There are people out there trying to sell the idea that business opportunities abound on the web, and that you are missing out on a great opportunity if you don't jump in. 'Net Based Business Opportunities: Are Some Flop-portunities? Is a free publication that explains some of the scams that are being offered for sale and things you need to be aware of before you buy in. To learn more request the publication from Consumer Response Center, Federal Trade Commission, 600 Pennsylvania, NW, H-130, Washington, DC 20580; 877-FTC-HELP; www.ftc.gov/
Most states regulate franchises through the State Attorney General Office. Contact your Attorney General to see if there have been complaints or issues with a particular company.
State Attorney General Offices
AlabamaTroy King State House, 11 S. Union St. Montgomery, AL 36130(334) 242-7300 http://www.ago.state.al.us
AlaskaTalis J. Colberg P.O. Box 110300Diamond CourthouseJuneau, AK 99811-0300(907) 465-3600 http://www.law.state.ak.us/
American SamoaAfa Ripley Jr. American Samoa Gov't, Exec. Ofc. Bldg, UtuleiTerritory of American Samoa,Pago Pago, AS 96799(684) 633-4163 http://www.samoanet.com/asg/asgdla97.html
ArizonaTerry Goddard 1275 W. Washington St.Phoenix, AZ 85007(602) 542-4266 http://www.azag.gov/
ArkansasDustin McDaniel 200 Tower Bldg., 323 Center St.Little Rock, AR 72201-2610(800) 482-8982 http://www.ag.arkansas.gov/
CaliforniaEdmund G. "Jerry" Brown Jr. 1300 I St., Ste. 1740Sacramento, CA 95814(916) 445-9555 http://ag.ca.gov
ColoradoJohn Suthers 1525 Sherman StreetDenver, CO 80203(303) 866-4500 http://www.ago.state.co.us/index.cfm
ConnecticutRichard Blumenthal 55 Elm St.Hartford, CT 06141-0120(860) 808-5318 http://www.ct.gov/ag/
District of ColumbiaLinda Singer John A. Wilson Building, 1350 PA Ave, NW Suite 409Washington, DC 20009(202) 724-1305 http://occ.dc.gov
DelawareJoseph R. "Beau" Biden III Carvel State Office Bldg.820 N. French St.Wilmington, DE 19801(302) 577-8338 http://attorneygeneral.delaware.gov/
FloridaBill McCollum The Capitol, PL 01Tallahassee, FL 32399-1050(850) 414-3300 http://myfloridalegal.com/
GeorgiaThurbert E. Baker 40 Capitol Square, SWAtlanta, GA 30334-1300(404) 656-3300 http://ganet.org/ago/
GuamAlicia G. Limtiaco Judicial Center Bldg., Ste. 2-200E120 W. O'Brien Dr.Hagatna, Guam 96910(671) 475-3409 http://www.guamattorneygeneral.com/
HawaiiMark J. Bennett 425 Queen St.Honolulu, HI 96813(808) 586-1500 http://www.hawaii.gov/ag/
IdahoLawrence Wasden StatehouseBoise, ID 83720-1000(208) 334-2400 http://www2.state.id.us/ag/
IllinoisLisa Madigan James R. Thompson Ctr.100 W. Randolph St.Chicago, IL 60601(312) 814-3000 http://illinoisattorneygeneral.gov/
IndianaSteve Carter Indiana Government Center South - 5th Floor402 West Washington StreetIndianapolis, IN 46204(317) 232-6201 http://www.in.gov/attorneygeneral/
IowaTom Miller Hoover State Office Bldg.1305 E. WalnutDes Moines, IA 50319(515) 281-5164 http://www.IowaAttorneyGeneral.org
KansasPaul Morrison 120 S.W. 10th Ave., 2nd Fl.Topeka, KS 66612-1597(785) 296-2215 http://www.ksag.org/home/
KentuckyGreg Stumbo State Capitol, Rm. 116Frankfort, KY 40601(502) 696-5300 http://ag.ky.gov
LouisianaCharles Foti P.O. Box 94095Baton Rouge, LA 70804-4095(225) 326-6000 http://www.ag.state.la.us/
MaineG. Steven Rowe State House Station 6Augusta, ME 04333(207) 626-8800 http://www.state.me.us/ag
MarylandDouglas F. Gansler 200 St. Paul PlaceBaltimore, MD 21202-2202(410) 576-6300 http://www.oag.state.md.us
MassachusettsMartha Coakley 1 Ashburton PlaceBoston, MA 02108-1698(617) 727-2200 www.mass.gov/ago
MichiganMike Cox P.O.Box 30212525 W. Ottawa St.Lansing, MI 48909-0212(517) 373-1110 http://www.michigan.gov/ag
MinnesotaLori Swanson State Capitol, Ste. 102St. Paul, MN 55155(651) 296-3353 http://www.ag.state.mn.us
MississippiJim Hood Department of JusticeP.O. Box 220Jackson, MS 37205-0220(601) 359-3680 http://www.ago.state.ms.us/
MissouriJeremiah W. (Jay) Nixon Supreme Ct. Bldg., 207 W. High St.Jefferson City, MO 65101(573) 751-3321 http://www.ago.mo.gov/
MontanaMike McGrath Justice Bldg., 215 N. SandersHelena, MT 59620-1401(406) 444-2026 http://www.doj.mt.gov
NebraskaJon Bruning State Capitol, P.O.Box 98920Lincoln, NE 68509-8920(402) 471-2682 http://www.ago.state.ne.us/
NevadaCatherine Cortez Masto Old Supreme Ct. Bldg.100 N. Carson St.Carson City, NV 89701(775) 684-1100http://ag.state.nv.us/
New HampshireKelly Ayotte State House Annex33 Capitol St.Concord, NH 03301-6397(603) 271-3658http://www.state.nh.us/nhdoj/
New Jersey Anne Milgram Richard J. Hughes Justice Complex25 Market St., CN 080Trenton, NJ 08625(609) 292-8740http://www.state.nj.us/lps/
New MexicoGary King P.O. Drawer 1508Sante Fe, NM 87504-1508(505) 827-6000http://www.nmag.gov/
New YorkAndrew Cuomo Dept. of Law - The Capitol, 2nd fl.Albany, NY 12224(518) 474-7330http://www.oag.state.ny.us
Northern Mariana IslandsMatthew T. Gregory Caller Box 10007, Capital HillSaipan, MP 96950-8907(670) 664-2341http://www.cnmiago.gov.mp/
North CarolinaRoy Cooper Dept. of JusticeP.O.Box 629Raleigh, NC 27602-0629(919) 716-6400http://www.ncdoj.com/default.jsp
North DakotaWayne Stenehjem State Capitol, 600 E. Boulevard Ave.Bismarck, ND 58505-0040(701) 328-2210http://www.ag.state.nd.us
OhioMarc Dann State Office Tower30 E. Broad St.Columbus, OH 43266-0410(614) 466-4320http://www.ag.state.oh.us
OklahomaW. A. Drew Edmondson State Capitol, Rm. 1122300 N. Lincoln Blvd.Oklahoma City, OK 73105(405) 521-3921http://www.oag.state.ok.us
OregonHardy Myers Justice Bldg.1162 Court St., NESalem, OR 97301(503) 378-4732http://www.doj.state.or.us
PennsylvaniaTom Corbett 1600 Strawberry SquareHarrisburg, PA 17120(717) 787-3391 http://www.attorneygeneral.gov
Puerto RicoRoberto J. Sanchez-Ramos GPO Box 902192San Juan, PR 00902-0192(787) 721-2900http://www.justicia.gobierno.pr
Rhode IslandPatrick Lynch 150 S. Main St.Providence, RI 02903(401) 274-4400http://www.riag.state.ri.us
South CarolinaHenry McMaster Rembert C. Dennis Office Bldg.P.O.Box 11549Columbia, SC 29211-1549(803) 734-3970http://www.scattorneygeneral.org
South DakotaLarry Long 1302 East Highway 14, Suite 1Pierre, SD 57501-8501(605) 773-3215http://www.state.sd.us/attorney/
TennesseeRobert E. Cooper, Jr. 500 Charlotte Ave.Nashville, TN 37243(615) 741-5860http://www.attorneygeneral.state.tn.us
TexasGreg Abbott Capitol Station, P.O.Box 12548,Austin, TX 78711-2548(512) 463-2100http://www.oag.state.tx.us
UtahMark Shurtleff State Capitol, Rm. 236Salt Lake City, UT 84114-0810(801) 538-9600http://attorneygeneral.utah.gov/
VermontWilliam H. Sorrell 109 State St.Montpelier, VT 05609-1001(802) 828-3173http://www.state.vt.us/atg
Virgin IslandsVincent Frazer Dept. of JusticeG.E.R.S. Complex 488-50C Kronprinsdens GadeSt. Thomas, VI 00802(340) 774-5666
VirginiaBob McDonnell 900 E. Main St.Richmond, VA 23219(804) 786-2071 http://www.oag.state.va.us
WashingtonRob McKenna 1125 Washington St. SEPO Box 40100Olympia, WA 98504-0100(360) 753-6200http://www.atg.wa.gov/
West VirginiaDarrell V. McGraw Jr. State Capitol, 1900 Kanawha Blvd. , E.Charleston, WV 25305(304) 558-2021http://www.wvago.us/
WisconsinJ.B. Van Hollen State Capitol, Ste. 114 E.P.O.Box 7857Madison, WI 53707-7857(608) 266-1221 http://www.doj.state.wi.us
WyomingBruce A. Salzburg State Capitol Bldg.Cheyenne, WY 82002(307) 777-7841http://attorneygeneral.state.wy.us
State Securities Regulators manage most investment advisors, and can also provide you with information on businesses in your state. Some states require franchisors to register with the Securities Regulators. To learn about the company and what is required of them in your state, contact your State Securities Regulators from the list below.
AlabamaSecurities Commission770 Washington Ave., Suite 570Montgomery, AL 36130-4700334-242-29841-800-222-1253 (AL)Fax: 334-242-0240E-mail: email@example.com/
AlaskaDivision of Banking and SecuritiesDepartment of Commerce, Community and Economic DevelopmentPO Box 11807150 3rd Street, Suite 217Juneau, AK 99811-0807907-465-25211-888-925-2521TTY: 907-465-5437Fax: 907-465-2549www.commerce.state.ak.us
ArizonaSecurities DivisionArizona Corporation Commission1300 West Washington, 3rd FlPhoenix, AZ 85007602-542-4242Fax: 602-594-7470E-mail: firstname.lastname@example.org
ArkansasSecurities DivisionHeritage West Bldg., Suite 300201 East Markham,Little Rock, AR 72201501-324-92601-800-981-4429Fax: 501-324-9268E-mail: email@example.com/arsec
CaliforniaDepartment of Corporations1515 K St., Suite 200Sacramento, CA 95814-4052916-445-72051-866-275-2677www.corp.ca.gov
ColoradoDivision of SecuritiesDepartment of Regulatory Agencies1560 Broadway, Suite 900Denver, CO 80202303-894-2320TTY: 1-800-659-2656Fax: 303-861-2126E-mail: firstname.lastname@example.org/securities
ConnecticutDepartment of BankingGovernment Relations and Consumer Affairs260 Constitution PlazaHartford, CT 06103-1800860-240-82991-800-831-7225Fax: 860-240-8178E-mail: email@example.com/dob
DelawareDivision of SecuritiesDepartment of JusticeState Office Bldg.820 North French St., 5th FloorWilmington, DE 19801302-577-8424TTY: 302-577-5783Fax: 302-577-6987www.state.de.us/securities
District of ColumbiaDept. of Insurance, Securities and Banking810 First St., NE, Suite 701Washington, DC 20002202-727-8000Fax: 202-535-1196E-mail: firstname.lastname@example.org
FloridaOffice of Financial Regulation200 East Gaines St.Tallahassee, FL 32399-0370850-410-98981-800-342-2762 (FL)Fax: 850-410-9748E-mail: email@example.com
GeorgiaDivision of Securities and Business RegulationOffice of the Secretary of State2 MLK Jr. Dr. S.E, Suite 802, West TowerAtlanta, GA 30334404-656-39201-888-733-7427Fax: 404-657-8410E-mail: firstname.lastname@example.org
HawaiiBusiness Registration DivisionDepartment of Commerce and Consumer Affairs335 Merchant St. Room 2012nd FloorHonolulu, HI 96813808-586-2744Fax: 808-586-2733E-mail: email@example.com
IdahoDepartment of Finance700 W. State St., 2nd Fl.PO Box 83720 (zip 83720-0031)Boise, ID 83702208-332-80001-888-346-3378 (ID)Fax: 208-332-8097finance.idaho.gov
IllinoisSecurities DepartmentSecretary of State300 W. Jefferson St, Suite 300ASpringfield, IL 62702217-782-22561-800-628-7937 (IL)Fax: 217-782-8876www.sos.state.il.us
IndianaSecurities DivisionOffice of the Secretary of State201 StatehouseIndianapolis, IN 46204317-232-65311-800-223-8791 (IN)www.state.in.us/sos
IowaSecurities and Regulated Industries Bureau340 Maple St.Des Moines, IA 50319-0066515-281-44411-800-351-4665Fax: 515-281-3059E-mail: firstname.lastname@example.org
KansasOffice of the Securities Commissioner618 South Kansas Ave.2nd FloorTopeka, KS 66603-3804785-296-33071-800-232-9580 (KS)Fax: 785-296-6872E-mail: email@example.com/public/ksecom
KentuckyDivision of SecuritiesDepartment of Financial Institutions1025 Capitol Center Dr., Suite. 200Frankfort, KY 40601-3868502-573-33901-800-223-2579Fax: 502-573-0086www.kfi.ky.gov
LouisianaSecurities DivisionOffice of Financial Institutions8660 United Plaza Blvd., 2nd FloorBaton Rouge, LA 70809225-925-4660Fax: 225-925-4548www.ofi.state.la.us
MaineOffice of Securities121 State House StationAugusta, ME 04333-0121207-624-85511-877-624-8551 (ME)TTY: 1-888-577-6690Fax: 207-624-8590www.mainesecuritiesreg.org
MarylandSecurities DivisionOffice of the Attorney General200 Saint Paul PlaceBaltimore, MD 21202-2020410-576-63601-888-743-0023 (MD)TTY: 410-576-6372Fax: 410-576-6532E-mail: firstname.lastname@example.org
MassachusettsOffice of the Secretary of StateOne Ashburton Place, 17th FloorBoston, MA 02108617-727-35481-800-269-5428 (MA)TTY: 617-878-3889Fax: 617-248-0177E-mail: email@example.com/sct
MichiganOffice of Financial and Insurance Services611 W. Ottawa St., 3rd FloorPO Box 30220Lansing, MI 48909517-373-02201-877-999-6442Fax: 517-335-4978www.michigan.gov/ofis
MinnesotaDepartment of Commerce85 Seventh Place East, Suite 500St. Paul, MN 55101651-296-40261-800-657-3602 (MN)TTY: 651-296-2860Fax: 651-296-4328E-mail: firstname.lastname@example.org
MississippiBusiness Regulation and EnforcementSecretary of State's Office401 Mississippi St.PO Box 136 (Zip 39205)Jackson, MS 39201601-359-13501-800-256-3494Fax: 601-359-1499E-mail: email@example.com
MissouriCommissioner of SecuritiesPO Box 1276Jefferson City, MO 65102573-751-41361-800-721-7996 (MO)Fax: 573-526-3124ago.missouri.gov/divisions/consumerprotection.htm
MontanaSecurities DivisionState Auditor840 Helena Ave.Helena, MT 59601406-444-20401-800-332-6148 (MT)Fax: 406-444-3497www.sao.state.mt.us
NebraskaDepartment of Banking & FinanceBureau of SecuritiesPO Box 95006Lincoln, NE 68509-5006402-471-3445www.ndbf.org
NevadaSecurities DivisionOffice of the Secretary of State555 East Washington Ave.Suite 4000Las Vegas, NV 89101702-486-2880Fax: 702-486-2888E-mail: firstname.lastname@example.org
New HampshireBureau of Securities RegulationDepartment of State107 N. Main StreetState House, Room 204Concord, NH 03301-4989603-271-1463Fax: 603-271-7933www.sos.nh.gov/securities
New JerseyBureau of SecuritiesDepartment of Law and Public SafetyPO Box 47029 (Zip 07101)153 Halsey St., 6th FloorNewark, NJ 07102973-504-3600Fax: 973-504-3601www.state.nj.us/lps/ca/home.htm
New MexicoSecurities DivisionRegulation & Licensing Department2550 Cerrillos RoadSanta Fe, NM 87505505-476-45801-800-704-5533 (NM)Fax: 505-984-0617www.rld.state.nm.us
New YorkBureau of Investor Protection and SecuritiesOffice of the Attorney General120 BroadwayNew York, NY 10271212-416-8200Fax: 212-416-8816www.oag.state.ny.us
North CarolinaSecurities Division2 South Salisbury St.Raleigh, NC 27601919-733-39241-800-688-4507 (Investor Hotline)Fax: 919-821-0818www.sosnc.com
North DakotaSecurities DepartmentState Capitol -- 5th Floor600 E. Boulevard Ave.Bismarck, ND 58505-0510701-328-29101-800-297-5124 (ND)Fax: 701-328-2946E-mail: email@example.com
OhioDivision of Securities77 South High St.22nd FloorColumbus, OH 43215-6131614-644-73811-800-788-1194 (Investor Protection Hotline)Fax: 614-466-3316www.securities.state.oh.us
OklahomaDepartment of SecuritiesFirst National Center120 North Robinson, Suite 860Oklahoma City, OK 73102405-280-7700Fax: 405-280-7742E-mail: firstname.lastname@example.org
OregonDepartment of Consumer & Business ServicesDivision of Finance and Corporate Securities350 Winter St., NEPO Box 14480Salem, OR 97309-0405503-378-41001-866-814-9710TTY: 503-378-4100Fax: 503-378-6444E-mail: email@example.com/DCBS
PennsylvaniaSecurities CommissionATTN: Office of SecretaryEastgate Office Building 2nd Floor1010 North 7th St.Harrisburg, PA 17102-1410717-787-80611-800-600-0007 (PA)Fax: 717-783-5122E-mail: firstname.lastname@example.org
Puerto RicoOffice of the Commissioner of Financial InstitutionsCentro-Europa Building - Suite 600, 1492 Ponce de Leon AvenuePO Box 11855San Juan, PR 00910-3855787-723-84451-800-981-7711Fax: 787-723-4225E-mail: email@example.com
Rhode IslandSecurities Division233 Richmond St., Suite 232Providence, RI 02903-4232401-222-3048TTY: 711 (In Rhode Island Only)Fax: 401-222-5629E-mail: firstname.lastname@example.org
South CarolinaSecurities DivisionOffice of the Attorney GeneralPO Box 11549Columbia, SC 29211-1549803-734-9916803-734-3970Fax: 803-734-4323www.scsecurities.org
South DakotaDivision of Securities445 East Capitol Ave.Pierre, SD 57501-3185605-773-4823605-773-3311Fax: 605-773-5953/773-6729www.state.sd.us/dcr/securities
TennesseeSecurities DivisionDepartment of Commerce and InsuranceDavy Crockett Tower, Suite 680500 James Robertson Pkwy.Nashville, TN 37243615-741-22411-800-863-9117 (TN)www.state.tn.us/commerce/
TexasState Securities BoardPO Box 13167 (78711-3167)208 East 10th - 5th FloorAustin, TX 78701512-305-8300Fax: 512-305-8310www.ssb.state.tx.us
UtahDivision of SecuritiesDepartment of Commerce160 East 300 South, 2nd FloorPO Box 146760Salt Lake City, UT 84114-6760801-530-66001-800-721-7233 (UT)Fax: 801-530-6980www.commerce.state.ut.us
VermontDepartment of Banking, Insurance, Securities, & Health Care Administration89 Main St., Drawer 20Montpelier, VT 05620-3101802-828-3420Fax: 802-828-2896www.bishca.state.vt.us/SecuritiesDiv/securindex.htm
VirginiaDivision of Securities and Retail FranchisingState Corporation CommissionPO Box 1197Richmond, VA 23218804-371-90511-800-552-7945 (VA)TTY: 804-371-9203Fax: 804-371-9911www.scc.virginia.gov/division/srf
WashingtonSecurities DivisionDepartment of Financial InstitutionsPO Box 9033Olympia, WA 98507-9033360-902-87001-877-746-4334TTY: 360-664-8126Fax: 360-586-5068www.dfi.wa.gov
West VirginiaSecurities CommissionState Auditor's OfficeState Capitol Bldg 1, Room W100Charleston, WV 25305304-558-22571-888-368-9507Fax: 304-558-4211E-mail: email@example.com
WisconsinDivision of SecuritiesDepartment of Financial InstitutionsPO Box 1768Madison, WI 53701-1768608-266-10641-800-47-CHECK (WI)TTY: 608-266-8818Fax: 608-264-7979www.wdfi.org
WyomingSecurities DivisionOffice of the Secretary of StateState Capitol Bldg.200 West 24th St.Cheyenne, WY 82002-0020307-777-7370Fax: 307-777-6217E-mail: firstname.lastname@example.org
Twenty-six states have business opportunity laws. Most of these laws prohibit sales of business opportunities unless the seller gives potential purchasers a pre-sale disclosure document that has first been filed with a designated state agency. State business opportunity laws typically cover every imaginable type of business opportunity that might be offered. If a business opportunity seller is not required to provide pre-sale disclosures by the Franchise Rule, these disclosures will almost always be required by the laws of the states listed below. The disclosures required by state business opportunity laws differ, and usually provide more abbreviated information than the FTC's Franchise and Business Opportunity Rule requires. However, most of these laws provide important rights and remedies for business opportunity investors, including required security bonds to cover investor losses. If you are considering purchasing a work-at-home or other business opportunity, and reside in a state with a business opportunity law, find out more about the protection provided by your state statute before you invest.
Alaska (filing required)Attorney General's OfficeCommercial and Fair Business Section1031 W. 4th Avenue, Suite 200Anchorage, Alaska 99501(907) 269-5200
California (filing required)Attorney General's OfficePublic Inquiry UnitP.O. Box 944255Sacramento, CA 94244-2550Toll-free in California only (800) 952-5225Out-of-state callers (916) 322-3360E-Mail: email@example.com
Connecticut (filing required)Department of BankingSecurities Division260 Constitution PlazaHartford, CT 06103Phone: (860) 240-8230Toll-free: (800) 831-7225Fax: (860) 240-8295 http://www.state.ct.us/dobE-mail: firstname.lastname@example.org
Florida (filing required)Dept. Agri. & Consumer Services407 S. Calhoun St.Finance & Accounting SectionTallahassee, FL 32301(850) 488-2221(800) 342-2176 (FL only)
Georgia (no filing required)Office of Consumer AffairsNo. 2 - Martin Luther King Dr.Plaza Level, East TowerAtlanta, GA 30334(404) 656-3790
llinois (filing required)Illinois Securities DepartmentLincoln Tower520 S. Second St. Suite 200Springfield, IL 62701(217)782-2256
Indiana (filing required)Indiana Office of Attorney GeneralConsumer Protection Division302 West Washington StreetIGCS 5th FloorIndianapolis, IN 46204(317) 232-6330
Iowa (filing required)Securities BureauSecond FloorLucas State Office BuildingDes Moines, IA 50319(515) 281-4441
Kentucky (filing required)Office of the Attorney GeneralOffice of Consumer Protection1024 Capital Center DriveFrankfort, KY 40601(502) 696-5300
Louisiana (bond filing required)Office of the Attorney GeneralConsumer Protection Section1885 3rd St.Baton Rouge, LA 70802(225) 326-6460
Maine (filing required)Banking BureauSecurities DivisionState House - Station 121Augusta, ME 04333(207) 624-8551
Maryland (filing required)Attorney General's OfficeSecurities Division200 St. Paul Pl. - 20th FloorBaltimore, MD 21202(301) 576-6360
Michigan (notice required)Consumer Protection DivisionDept. of the Attorney GeneralPO Box 30213Lansing, MI 48909(517) 373-7117
Minnesota (filing required)Department of CommerceRegistration Division133 East 7th StreetSt. Paul, MN 55101(651) 296-6328
Nebraska (filing required)Dept. of Banking & FinanceCommerce Court1230 "O" Street, Suite 400PO Box 95006Lincoln, NE, 68509-50061-877-471-3445 http://www.ndbf.org/
New Hampshire (filing required)Attorney General's OfficeConsumer Protection Div.State House AnnexConcord, NH 03301(603) 271-3641
North Carolina (filing required)North Carolina Department of the Secretary of StateP.O. Box 29622Raleigh, NC 27626-0622(919) 807-2000
Ohio (no filing required)Attorney General's OfficeConsumer Protection Section25th Floor, State Office Tower30 E. Broad Street - 14th FloorColumbus, OH 43215(614) 466-8831800-282-0515 (in-state only)http://www.ag.state.oh.us
Oklahoma (filing required unless exempt)Oklahoma Department. of SecuritiesSuite 860, First National Center120 N. RobinsonOklahoma City, OK 73102(405) 280-7700 (voice)(405) 280-7742 (fax) http://www.securities.ok.gov
South Carolina (filing required)Secretary of State's OfficeP.O. Box 11350Columbia, SC 29211(803) 734-2169
South Dakota (filing required)South Dakota Division of Securities445 E. Capitol Ave.Pierre, SD 57501(605) 773-4823
Texas (filing required)Secretary of State's OfficeStatutory Documents SectionP.O. Box 12887Austin, TX 78711-2887(512) 475-1769 http://www.sos.state.tx.us/statdoc/statforms.shtml#BOAF
Utah (filing required)Consumer Protection Division160 East 300 SouthSalt Lake City, UT 84111(801) 530-6601
Virginia (no filing required)Consumer Affairs Office101 North 8th Street Richmond, VA 23219(804) 786-0594(800) 451-1525 (in-state only)
Washington (filing required)The Department of Financial InstitutionsSecurities DivisionP.O. Box 9033Olympia, WA 98507-9033Voice: (360) 902- 8760Fax (360) 902-0524
Wisconsin Wisconsin Department of AgricultureTrade and Consumer ProtectionP.O. Box 8911Madison, WI 53708-8911(800) 422-7128