Requirements to Buy a Franchise in Florida

When a franchisor and a franchisee sign a franchise agreement after due negotiation, both parties agree that they are entering a legal relationship under a legally binding contract.

Hence, it is important to understand the essentials of the pre-sale stage of a franchise. Read on to discover the requirements to buy a franchise in Florida.

Franchise Exemption Florida – As Provided by Law

Chapter 559 of the Florida Statutes details all state regulations on trade, commerce, and investments. As expected, franchises must meet certain requirements to operate legally within the state.

Under Florida Statutes §559.802 (1), “the sale of a franchise is exempt from this part if:

The franchise meets the definition of that term as defined by the Federal Trade Commission regulations entitled, “Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures,” as set forth in 16 C.F.R. ss. 436.1 et seq.; and
Before offering for sale or selling a franchise to be located in this state or to a resident of this state, the franchisor files a notice with the department, on a form adopted by the department, stating that the franchisor is in substantial compliance with the requirements of the Federal Trade Commission rule and pays a fee in an amount set by the department not exceeding $100″

Florida Statutes §559.802 (2) provides that “the initial exemption granted under this section is for a period of 1 year after the date of filing the notice, and it may be renewed each year for an additional 1-year period upon filing a notice for renewal and paying a renewal fee in an amount set by the department, not exceeding $100.”

Florida Statutes §559.802 (3) adds that “the department may require only:

The name of the applicant
The name of the franchise and the name under which the applicant intends to, or does, transact business, if different
The applicant’s principal business address, and
The applicant’s federal employer identification number”

Applying for Franchise Exemption in Florida

To apply for the statutory exemption, a franchisor must fill out and submit the relevant forms to the Florida Department of Agriculture and Consumer Services (FDACS).

The franchisor must file the annual Franchise Exemption forms and submit them with the applicable filing fee before offering or selling to a franchisee in Florida.

The exemption applies to applicants offering a franchise within Florida as long as the franchise complies with the regulations of the Federal Trade Commission (FTC) and other relevant regulations.

Florida Franchise Purchase – Conducting Due Diligence

Before the parties involved can sign the closing paperwork, the franchisor must provide the franchisee with a franchise disclosure document (FDD). This legal document is part of the pre-sale due diligence process, detailing all the essential information on how the business relationship will work.

An often overlooked aspect of the FDD is the part that outlines the existence of contractual restrictions involved in the transaction, such as trade secret agreements, confidentiality agreements, non-compete agreements, and other similar guarantees.