What is a Franchise Broker or Franchise Seller ? Are there any laws that apply to them?
A Franchise Seller is someone who sells franchises for a franchisor, normally for a commission on each franchise sale.
A Franchise Seller needs to be listed on the Receipt pages of the FDD, at least on a transaction handled by the Franchise Seller.
In addition, a franchisor must file Franchise Seller Disclosure Forms with the following franchise registration states, disclosing certain biographical and legal information about each Franchise Seller: California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, and Washington State.
If a Franchise Seller is not an officer, director, or employee of the franchisor, then the Franchise Seller is considered a Franchise Broker.
Franchise Brokers are supposed to register in Illinois, New York, and Washington State.
And if a franchisor is using a Franchise Broker to assist with franchise sales in Washington State, then the franchisor is required to file a Washington Appointment of a Franchise Broker form with Washington State, identifying the Franchise Broker and supplying the Franchise Broker’s Washington Franchise Broker Registration number.