Virginia
Franchise Registration

Virginia

Virginia has both franchise and business opportunity laws.

Virginia Franchise Laws

A franchise is defined as a written contract or agreement involving two or more individuals, in which:

A franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services at retail under a marketing plan or system prescribed in substantial part by a franchisor.
The operation of the franchisee’s business pursuant to such plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate.
The franchisee is required to pay, directly or indirectly, a franchise fee of $500 or more. Va. Code Ann. § 13.1-559.

Franchise laws in Virginia are applicable when franchisees intend to establish or maintain a business location within the Commonwealth of Virginia. Va. Code Ann. § 13.1-559.

Virginia Franchise Registration Filing

Virginia is a franchise registration state that requires filing the Franchise Disclosure Document (“FDD”) with the state.

In the state, it’s common for the authorities to review and issue comment letters suggesting edits to the Franchise Disclosure Document (FDD) as requested by the Franchise Regulator.

The initial filing fee is $500 and must be accompanied by the following documents:

Franchise Disclosure Documents submitted for registration must encompass audited financial statements, even for startup franchisors.

Virginia Fee Deferrals

Virginia may require a fee deferral, which requires a deferment on the payment of initial franchise fees until the franchisor has completed its pre-opening obligations.

A fee deferral is imposed due to a statutory definition of insolvency, which applies whenever “liabilities exceed assets.” (Va. Code Ann. § 13.1-561). This examiner cannot look past this precise definition at other financial positive factors like other states may.

Virginia does have an Escrow option, which requires a bank with branches in Virginia to serve as an Escrow Agent. The Escrow option requires both Virginia and Franchisee Approval to release funds.

The fee Deferral requirement is generally an easier path with less state involvement, but it may not be suitable for everyone.

Virginia Franchise Amendments

Virginia requires an amendment filing within 30 days of any material change. 21 VAC 5-111-40.

A material change is defined broadly and includes, “a fact, circumstance, or condition that would have a substantial likelihood of influencing a reasonable prospective franchisee in the making of a decision relating to the purchase of a franchise.” 1VAC 5-110-10.

A post-effective amendment filing is $100.

Virginia Franchise Renewals

Virginia registrations must be renewed 30 days before the one-year anniversary of the registration date.

The renewal filing fee is $250 and must be accompanied by the following documents:

Virginia's Franchise Relationship and Termination Laws

Virginia’s Retail Franchising Act makes it unlawful for a franchisor to terminate a franchisee without reasonable cause or to use undue influence to force a franchisee to terminate a franchise. Va. Code Ann. § 13.1-564.

More Information About Virginia's Franchise Laws

Virginia Business Opportunity Laws

Virginia also has Business Opportunity Laws, which define a “business opportunity” as the sale of any products, equipment, supplies or services that are sold to a purchaser upon payment of an initial required consideration exceeding $500 for the purpose of enabling such purchaser to start a business, and in which the seller:

Represents that the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases or other similar devices, or currency-operated amusement machines or devices, on premises neither owned nor leased by the purchaser or seller; or
Represents that it will purchase any or all products made, produced, fabricated, grown, bred or modified by the purchaser using in whole or in part the supplies, services, or chattels sold by the seller to the purchaser; or
Guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid for the business opportunity, or that the seller will refund all of part of the price paid for the business opportunity, or repurchase any of the products, equipment, supplies or chattels supplied by the seller,if the purchaser is not satisfied with the business opportunity; or
Represents that the seller will provide a sales program or marketing program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid for the business opportunity. Va. Code Ann. § 59.1-263.

Virginia Business Opportunity Registration

The sale of business opportunities in Virginia requires a Written Disclosure Statement, surety bond or escrow account, and written agreement.

Virginia Business Opportunity Franchise Exemption

Franchises are excluded from the Business Opportunity Laws. Va. Code Ann § 59.1-263.

You can access the Business Opportunity Sales Act here.

If you offer a business opportunity in Virginia, we can help you determine if, and how, your company must comply with Virginia’s Franchise or Business Opportunity Laws.

Want to learn more about our franchise services and franchising in Virginia? Contact Us or call (757)-263-4596 to schedule a consultation. You can also visit our interactive map to learn more about other state franchise laws.

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