Franchise Registration & Compliance

Stage 1. Preparatory Audit (Readiness Audit)

What the attorney does — specifically

1. Conducts a brief legal audit of the business model: checks if the business is even suitable for franchising (licenses, regulated activities, etc.).
2. Checks the status of the trademark (whether there is a federal registration — important for some states).
3. Requests and reviews financial statements: accounting, P&L, cash flow — needed for Item 19 (financial performance representation) in the FDD.
4. Prepares a document checklist: operations manual, training programs, list of current units/franchisees, standard supply agreements.

Stage 2. Preparation of the FDD and Core Agreements

What the attorney does — specifically

1. Prepares the Franchise Disclosure Document (FDD) — including all 23 Items, cover page, table of contents, and State Cover Sheets where required. (The FDD is the heart of franchising; it contains all necessary information for the franchisee). 
2. Drafts/adapts the franchise agreement: payment structures, terms, duration, rights transfer conditions, territory, operational standards.
3. Prepares the Operations Manual (or a minimal version) and training materials.
4. Finalizes Item 19 (financial performance representation) — either formulates a disclaimer or approves the permitted financial metrics.

Stage 3. State Registration / Filing + Materials Submission (State & federal compliance)

What the attornhey does — specifically

1. Determines in which states registration or registration/filing of the FDD is required — the list of states varies, so the lawyer prepares a state matrix and a submission plan.
2. Prepares and submits each state cover sheet and required forms; pays state fees. (Some states require additional documents — financial statements, bonds, translations, etc.)
3. Responds to state comment letters (if the regulator requests revisions/clarifications) — prepares additional explanations or amendments.
4. Monitors the effective date: in registration states, there is often a "waiting period" — for example, if there is no stop order, the application usually becomes effective approximately 30 business days after submission; if a comment is received — then another 15 business days after the response.

Stage 4. Pre-sale Preparation and Marketing Materials (Offer Compliance)

What the attorney does — specifically

1. Reviews all marketing/advertising materials from the perspective of franchising disclosure (to avoid misleading claims).
2. Prepares templates for offer letters, application forms, instructions on complying with the "14-day rule" (i.e., the franchisee must receive the FDD at least 14 days before signing/payment). 
3. Provides recommendations on escrow/deposits to avoid violating state or FTC rules.
4. Trains the internal sales team (on what can and cannot be said to a potential franchisee).

Stage 5. Franchisee Due Diligence and Deal Closing (Signing & Closing)

What the attorney does — specifically

1. Conducts franchisee verification (background check, source of funds) — may involve third-party providers (costs separate).
2. Negotiates financial and territorial terms: edits addenda, contract notes, royalty terms, territory carve-outs.
3. Prepares documents for signing: final FDD, franchise agreement, exhibits, escrow instructions, disclosure acknowledgments.
4. Ensures compliance with the 14-day waiting period and documents the date the franchisee received the FDD.
5. Manages closing (collecting payments, signing documents, granting access to operational systems).

Stage 6. Post-Sale Support, FDD Updates, and Renewals

What the attorney does — specifically

1. Prepares annual FDD updates (renewal) and insurance, monitors state renewals/filings. Many brands have an annual deadline for FDD updates; if you operate in registration states — you need to keep track of their deadlines. 
2. Makes amendments to the FDD/agreements when the business model changes (new fees, territory changes, changes in financial statements).
3. Provides support in disputes, transfer requests, audits from regulators or franchisees.

Timing: ongoing; main cycle — once a year + ad hoc.

Estimated cost: $3,000–$20,000+ per year (depending on the volume of updates and state presence).