Are State Registration Deadlines Changing Under COVID-19? Yes And No (a survey)

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Good things come to those who wait … except when you are referring to state franchise registration timelines.  This is one of the busiest times of year for franchisors with fiscal year ends that coincide with the calendar year, as the Franchise Disclosure Document (“FDD”) for those franchisors must be updated no later April 30 of each year. This is compounded by the fact that certain franchise registration states, New York, Minnesota and Illinois to name a few, also align their franchise renewal registration timelines with the same 120-day fiscal year end. This is (likely) further compounded by deadlines for other franchise registration states generally coinciding with this timeline.

So what is a franchisor to do when a global pandemic arises during the height of franchise registration season? Thankfully, many of the franchise registration states have issued guidance extending deadlines for submissions. Because certain of the state regulatory bodies are continuing to work remotely, however, some regulators are not extending any deadlines but may be making other concessions. As such, we have put together a list, current as of March 26th, with the guidance proffered by each state regulator thus far:

California No extensions but will accept DocuSign documents, waive late fees, and franchisors are strongly encouraged to submit filings through the online filing system. Any paper filings must include a waiver of the automatic effectiveness.
Illinois No extensions but will not require notarized registration materials.
Maryland

Extension of deadlines for franchise renewal registrations and exemptions that expire during the “Coronavirus State of Emergency” (announced on March 5, 2020) for 30 days after the end of “Coronavirus State of Emergency” issued by the Governor of the State of Maryland.

Franchisors may offer units pursuant to a FDD that is not registered with Maryland so long as: (a) the FDD has been updated in accordance with the FTC Rule on Franchising; (b) the franchisor does not enter into a franchise agreement with the prospect until the 2020 FDD is approved in Maryland; and (c) the franchisor follows proper re-disclosure requirements with respect to the Maryland-approved FDD (including provision of the changed pages in response to Maryland).

Online submission is unavailable.

New York

Franchisors have been granted a 90-day extension of renewal deadline to July 29, 2020 if such renewal deadline is between March 23, 2020 and April 30, 2020 (the “Relief Period”).

A franchisor that is filing a franchise registration renewal or an amendment may offer franchises, but not sell, until the IPB reviews the application and notifies the franchisor in writing that its FDD has been accepted.

All filings can be submitted in email form in addition to the required paper copies. The emailed copies must include a copy of the front and back of the filing fee check and include the following statement: “I will cause this filing and payment to be mailed to the Department of Law forthwith.” The email submission should be sent to: IPBFRANCHISE@AG.NY.GOV.

Rhode Island No penalties for registrations due in March and April (per internal guidance).
Virginia

Extension of deadlines by 21 days for franchise renewal registrations for deadlines that expire during the “Judicial Emergency Declaration” by the Supreme Court of Virginia (announced on March 16, 2020).

Online submission is unavailable.

North Dakota, South Dakota, Washington No extensions but you may discuss issues with examiner on case-by-case basis.
Hawaii, Wisconsin, Michigan, Indiana, Minnesota, Rhode Island Pending response from regulatory body.

We will update this list as we receive further guidance from any state examiners.

We are wishing all of you safety and health during this tumultuous time.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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