Washington
Franchise Registration
Washington
Washington State is a franchise registration and business opportunity law state.
Washington Franchise Laws
Washington State defines Franchise as “An agreement, express or implied, oral or written, by which:
(i) A person is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan prescribed or suggested in substantial part by the grantor or its affiliate;
(ii) The operation of the business is substantially associated with a trademark, service mark, trade name, advertising, or other commercial symbol designating, owned by, or licensed by the grantor or its affiliate; and
(iii) The person pays, agrees to pay, or is required to pay, directly or indirectly, a franchise fee.
(b) The following shall not be construed as a franchise within the meaning of this chapter:
(i) The payment of a reasonable service charge to the issuer of a credit card by an establishment accepting or honoring such credit card or any transaction relating to a bank credit card plan;
(ii) Actions or transactions otherwise permitted, prohibited or regulated under laws administered by the insurance commissioner of this state;
(iii) Any motor vehicle dealer franchise subject to the provisions of chapter 46.70 RCW. (Rev. Code Wash. (ARCW) § 19.100.010).
Washington Franchise Registration Filing
The initial filing fee is $600 and must be accompanied by the following documents:
- Uniform Franchise Registration Application with Notarized Certification
- Uniform Franchise Consent to Service of Process
- Corporate Acknowledgement
- Franchisor's Costs and Source of Funds
- Franchise Seller Disclosure Form
- Consent of Accountant
- Franchise Advertising Material
- Washington Appointment of a Franchise Broker
- A Clean Copy of the Franchise Disclosure Document
Washington Fee Deferrals
Washington State 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 and is open for business. Rev. Code Wash. (ARCW) § 19.100.050.
Washington State does have a Surety bond and Escrow option. The Escrow option requires a bank with branches in Washington State to serve as an Escrow Agent. The Escrow option requires both Washington State and Franchisee Approval to release funds.
Since Washington State requires the franchisee to be open for business, the surety bond is a great option, especially where there is a buildout so the franchisor can receive the initial franchise fee without an extended delay.
However, a surety bond requires a franchisor to apply for the bond, go through underwriting, give a personal guarantee in some situations, and pay a premium of 1-3% of the bond amount normally.
The Fee Deferral requirement is generally an easier path with less state involvement, but it may not be suitable for everyone.
Washington Franchise Amendments
Washington State requires an amendment filing if there is a materially adverse change in the condition of the franchisor or any material change in the information contained in the Franchise Disclosure Document before the further sale of any franchise. Rev. Code Wash. (ARCW) § 19.100.070.
A post-effective amendment filing fee is $100.
Washington State Franchise Broker
It is unlawful for any franchise broker to offer to sell or sell a franchise in this state unless the franchise broker is registered in Washington. It is also unlawful for any franchisor to employ a franchise broker unless the franchise broker is registered. Rev. Code Wash. (ARCW) § 19.100.140.
Washington Franchise Renewals
The renewal filing fee is $100 and must be accompanied by the following documents:
- Uniform Franchise Registration Application with Notarized Certification
- Franchisor's Costs and Source of Funds
- Franchise Seller Disclosure Form
- Consent of Accountant
- Franchise Advertising Material
- Washington Appointment of a Franchise Broker
- A Clean and Marked Copy of the Franchise Disclosure Document
Washington's Franchise Relationship and Termination Laws
Washington makes it unlawful for a franchisor to terminate a franchisee without good cause. Rev. Code Wash. (ARCW) § 19.100.180.
More Information About Washington's Franchise Laws
Washington Franchise Registration Laws
Washington Business Opportunity Laws
Washington State also has Business Opportunity Laws, which define a “business opportunity” as an agreement, that the seller shall provide the purchaser any product, equipment, supplies or services and upon payment of an initial required consideration exceeding $300 for the purpose of enabling the 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 provide or assist the purchaser in finding outlets or accounts for the purchaser’s products or services.
- 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 or 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. Rev. Code Wash. (ARCW) § 19.110.020
Washington Business Opportunity Requirements
The sale of business opportunities in Washington State requires a Written Disclosure Statement, surety bond or escrow account, and written agreement.
Washington's Franchise Exemption From Business Opportunity Laws
Franchises are excluded from the Business Opportunities Laws. (Rev. Code Wash. (ARCW) § 19.110.040).
More Information about Washington 's Business Opportunity Laws
You can access Washington’s Business Opportunity Laws by clicking here.
If you offer a business opportunity in Washington, we can help you determine if, and how, your company must comply with Washington’s Franchise or Business Opportunity Laws.
Want to learn more about our franchise services and franchising in Washington? 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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