Florida Franchise Disclosure Requirements
1. Definition
Franchise disclosure requirements are legal rules that obligate franchisors to provide prospective franchisees with specific information about the franchise opportunity before any agreement is signed or money is exchanged.
The goal is to give franchisees a full picture of the risks, costs, and obligations of entering into a franchise relationship.
2. Florida Legal Context
Franchise disclosures in Florida are governed primarily by federal law, with additional protections under state law:
- FTC Franchise Rule (16 C.F.R. §436)
- Requires franchisors to provide a Franchise Disclosure Document (FDD) to prospective franchisees at least 14 days before signing any agreement or paying money.
- The FDD contains 23 items, including fees, initial investment estimates, litigation history, franchisor obligations, financial performance representations, and termination/renewal terms.
- Florida Law
- Florida is a “non-registration” state: franchisors do not have to file their FDD with the state.
- However, Florida enforces its Deceptive and Unfair Trade Practices Act (FDUTPA, Fla. Stat. §501.201), which prohibits misleading or fraudulent franchise sales practices.
- Franchisors that fail to disclose required information may face lawsuits, rescission of agreements, and financial penalties.
3. Real-World Application
Examples of franchise disclosure in Florida:
- A Tampa fitness franchisor provides the FDD to all potential franchisees two weeks before signing.
- A Miami restaurant franchisee discovers litigation history in the FDD, influencing the decision not to invest.
- An Orlando retail franchisor updates its FDD annually to remain compliant with the FTC rule.
4. Why It Matters for Business Owners
Disclosure requirements protect both franchisees and franchisors.
Why it matters:
- For franchisees: Ensures you understand fees, restrictions, and risks before investing.
- For franchisors: Proper disclosures reduce the risk of lawsuits for misrepresentation.
- For both parties: Provides transparency and a clear baseline for the relationship.
Common mistakes Florida franchisors make:
- Failing to update the FDD annually.
- Not providing disclosures within the required timeframe.
- Making verbal promises not included in the FDD.
- Overlooking FDUTPA, exposing themselves to claims of deceptive practices.
5. Real-World Florida Examples
- A Sarasota franchisee successfully rescinded a contract after proving the franchisor failed to disclose required information in the FDD.
- A Jacksonville franchisor avoided litigation by updating its FDD annually and providing thorough training on disclosure compliance.
- A Fort Lauderdale franchisor faced penalties for misleading financial performance claims outside of the FDD.
6. How Our Law Firm Can Help
At Black Rock Trial Lawyers, we assist both franchisors and franchisees with disclosure compliance and review. Our services include:
- Reviewing FDDs for franchisees to identify risks and hidden costs
- Advising franchisors on preparing and updating FDDs
- Ensuring compliance with FTC and Florida disclosure laws
- Representing clients in disputes over misrepresentation or failure to disclose
- Educating entrepreneurs on their disclosure rights and obligations
We make sure you enter franchise relationships with full transparency and protection.
7. FAQs (Frequently Asked Questions)
Q: Is Florida a franchise registration state?
A: No. Florida does not require franchisors to register their FDD with the state.
Q: How long before signing must I receive the FDD?
A: At least 14 days.
Q: Can franchisors make promises outside of the FDD?
A: No. Verbal promises not included in the FDD are not enforceable and may be illegal.
Q: How often must the FDD be updated?
A: Annually, and whenever there are material changes.
Q: Why hire a lawyer for franchise disclosures?
A: A lawyer ensures you understand the disclosures, helps franchisors comply with legal requirements, and prevents costly mistakes.