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Top 10 Ways to Expedite 2008 Franchise Renewal Applications

With the annual franchise renewal application process upon us, the Department of Corporations is providing the following “Top 10 List” of helpful tips designed to assist you with your renewal application and to help us expedite the review process.  Our goal is to provide you with suggestions on how to ensure your application is complete and avoid unnecessary delays due to insufficient information.  All references to Rules, below, are to Sections of Title 10, California Code of Regulations and references to the Franchise Investment Law (FIL) are to the California Code of Regulations.

Please Note: Any grossly deficient application (e.g., the filing of a cover letter and a check WITHOUT the current UFOC or franchise agreement) will be summarily rejected and the application and check will be returned. The applicant will then need to file another renewal application or (if the renewal period has passed) a new registration application with a $675 filing fee, rather than the $450 renewal fee.

When applying to renew a franchise registration, please provide the following with the renewal application prior to the annual expiration date specified in Rule 310.120:

  1.  If you have an April 20 or April 21, 2008 expiration date for your 2007 registration, March 28, 2008 is your last filing day (i.e., the day it is received by the Department) for automatic effectiveness of your registration due to the March 31Cesar Chavez Day state holiday (see Government Code Section 19853).  Filings received between April 1 and April 21, 2008 (regardless of whether there is an April 20 or April 21, 2008 expiration date) are treated as renewals ($450 filing fee) but effectiveness of the registration requires the Department to issue an order.  Filings received after the registration has expired are required to file under FIL 31111 and pay a $675 filing fee.
  2. The Uniform Franchise Registration Application should be complete, and include all of the following:
    • A transmittal or cover letter referencing the Department’s file number, identifying whether you are submitting the Uniform Franchise Offering Circular (UFOC) or the Franchise Disclosure Document (FDD) and requesting postponement of the automatic effectiveness of the registration
    • Filing fee of $450, payable to the “California Department of Corporations”
    • Application Facing Page and a signed and notarized Signature Verification Page and Corporate Acknowledgment (by an officer or general partner of the franchisor or an individual with a power of attorney if the appropriate resolution is attached.)
    • Customer Authorization of Disclosure of Financial Records
    • Signed and Notarized Consent to Service of Process (not required for the following California entities: a corporation, a limited partnership or a limited liability company)
    • Supplemental Information Page with completed budget
    • Sales Agent Disclosure Forms (for agents selling in California, clean and redacted copies if the form requires the personal information identified below)
    • Entire UFOC/FDD in Plain English with all exhibits including the Franchise Agreement (Underscore any changes to the UFOC/FDD or to any other document previously filed. See Rule 310.122.1. Color highlighting is not acceptable.)
    • See special instructions for the UFOC/FDD. See Rule 310.114.1.
    • Financial statements must be audited. See Rule 310.111.2. See Commissioner’s Release 15-F for a discussion of U.S. GAAP.  Submit the Manually Signed Consent by Company’s CPA as a part of the application and not as a part of the UFOC/FDD
    • Guarantee of Performance or other Financial Assurances (if required/needed)

    If sales agent disclosure forms are being submitted with the application and the form requires the personal information identified below, it will also be very helpful if you include un-redacted and redacted hard copies of the forms. The “un-redacted” materials should contain a complete copy of the sales agent disclosure forms for the Department’s confidential files. The “redacted” materials should contain a copy of the sales agent disclosure form with the sales agent’s personal information deleted (i.e., home address, home telephone number, date of birth and social security number) for the Department’s public files.

    If sales agent disclosure forms are being submitted with the application, it will also be very helpful if you include un-redacted and redacted hard copies of the forms as well as un-redacted and redacted CDs in the electronic ".pdf" format. The "un-redacted" materials should contain a complete copy of the sales agent disclosure forms for the Department's confidential files. The "redacted" materials should contain a copy of the sales agent disclosure form with the sales agent's personal information deleted (i.e., home address, home telephone number, date of birth and social security number) for the Department's public files. The cover letter from the attorney or officer of the company submitting the file should contain a representation that all of the information contained in both versions of the forms is identical with the exception of the deleted or redacted personal information.

  3. All applicants are encouraged to file earlier than the 15 business days prior to the expiration of the registration as it is anticipated that the Department’s review time will increase due to the many filings involving the FDD.  In addition, each applicant should submit a request to postpone the automatic effectiveness of the registration due to the extra review time involved in these filings.  Be further advised that if the Department issues comments on your application prior to effectiveness, the Department considers the application incomplete and that it cannot go automatically effective as a result (i.e., the effectiveness is tolled).  Renewal applications should be filed at the Los Angeles or San Francisco offices.

    320 West 4th Street, Suite 750
    Los Angeles, CA 90013-2344
    (213) 576-7500
    (866) 275-2677 or 866 ASK CORP
    [ Yahoo! Maps ] *

    71 Stevenson Street, Suite 2100
    San Francisco, CA 94105-2980
    (415) 972-8559
    (866) 275-2677 or 866 ASK CORP
    [ Yahoo! Maps ] *

  4. The Federal Trade Commission (FTC) published final amendments to the Federal Franchise Rules in Part 436 and provided for a July 1, 2007 through June 30, 2008 phase-in period for the FDD.  On and after July 1, 2008, only the FDD can be used to offer and sell franchises, regardless of when the franchisor registered its franchise system and regardless of any prior registrations involving a UFOC.  See Release 17-F. All registered franchisors wanting to offer or sell franchises on and after July 1, 2008 must file the FDD as a part of its 2008 renewal process or file and have approved a post-effective amendment application with the FDD before any franchises can be offered or sold.  The Department’s FDD Packet is available in our offices or on our website.
  5. Civil Code §1189 requires that any notary’s certificate of acknowledgment taken within this state must be in the form found in the FDD packet on our website.  Any certificate of acknowledgment taken in another state shall be sufficient in California if it is taken in accordance with the laws of the state where the acknowledgment is made.  In that instance only, the current NASAA form would be acceptable in California.

  6. As of January 1, 2008, California Corporations Code Section 31119 requires that the offering circular together with all proposed agreements relating to the sale of the franchise be delivered to prospective franchisees at least 14 days prior to execution by the prospective franchisee of any binding franchise or other agreement, or at least 14 days prior to the receipt of any consideration, whichever occurs first.
  7. A franchisor or subfranchisor that uses the services of a development agent should consider Release 18-F to determine whether the development agent is a subfranchisor and whether registration is needed. 

  8. Do NOT bind, staple or use paper clips or fasteners of any kind on individual documents to separate an individual document from another.  Please use colored divider/separator sheets between different documents and then rubber band or clip the entire application together.  For faster electronic processing, we recommend that the filing be submitted using only single sided 8½” by 11” sheets of white paper.  This does not preclude the applicant from using double sided paper in the final document once the franchise is registered.   

  9. Include copies of any advertisement to be used and file separately the original notice of exemption for web site advertisement (review Rules 310.156 through 310.156.3) and attach a copy (so marked) of this filing to your application for registration.  The written notice claiming the Internet Ad exemption under Rule 310.156.3 should include a heading to help staff identify the notice, such as:

    NOTICE OF EXEMPTION FOR INTERNET ADVERTISEMENT
    SECTION 310.156.3 OF
    TITLE 10, CALIFORNIA CODE OF REGULATIONS

  10. File separately the original notice(s) for negotiated sales under Rule 310.100.2 and attach a copy (so marked) of this filing to your application.  Include the statement as required by Rule 310.122.  See also Corporations Code §31109.1 and Rule 310.100.4.

In addition to filing a paper or hard copy of the renewal application and the above-listed items, an applicant may also wish to submit the applications and items on a CD with each item named in a clear and concise manner (e.g. transmittal letter, facing page, Customer Authorization, UFOC/FDD, Attach. 1 Agreement, Ex. 5 Financials, etc.)  All of the documents submitted should be converted to Adobe Acrobat  “.pdf” files.  This additional submission will expedite the processing of the file into the CalEASI database.  The cover letter from the attorney or officer of the Company submitting the filing should contain a representation that all of the information contained in the electronic “.pdf” files is identical to the paper documents.  If you are submitting a CD, a hard copy of the initial or renewal application must still be submitted.

List of Documents for Franchise Registration/Renewal

Document index

CD #1

Application Transmittal Letter
Application Facing Page
Certification Page
Consent to Service of Process (not required for a CA corporation, limited partnership or limited liability company)
Corporate Acknowledgement
Supplemental Information
Sales Agent Disclosure Forms (redacted)
Guarantee of Performance (if any)
Auditor’s Consent
Franchise Offering Circular/Disclosure Document (clean/marked copy)
Receipt

Exhibits:

  • Franchise Agreement (clean/marked copy)
  • Financial Statements
  • Area Development Agreement (if any)
  • List of Administrators
  • Agents for Service of Process
  • List of Franchisees
  • List of Former Franchisees

  • State Specific Appendix
  • Other Exhibits

CD #2
Customer Authorization of Disclosure of Financial Records
Sales Agent Disclosure Forms (un-redacted)


List of Documents for Franchise Registration/Renewal

Document index

CD #1

  • Application Transmittal Letter
  • Application Facing Page
  • Certification Page
  • Consent to Service of Process (required for all except CA corporations)
  • Corporate Acknowledgement
  • Supplemental Information
  • Sales Agent Disclosure Forms (redacted)
  • Guarantee of Performance (if any)
  • Auditor's Consent
  • Franchise Offering Circular (clean/marked copy)
  • Receipt
  • Exhibits:
    • Franchise Agreement (clean/marked copy)
    • Financial Statements
    • Area Development Agreement (if any)
    • List of Administrators
    • Agents for Service of Process
    • List of Franchisees
    • List of Former Franchisees
    • State Specific Appendix
    • Other Exhibits

CD #2

  • Customer Authorization of Disclosure of Financial Records
  • Sales Agent Disclosure Forms (un-redacted)

Visit our web site! We would appreciate feedback from you about your application process. Was it handled in a timely manner? Is there additional information you would like available on our web site? Please let us know by completing a Customer Satisfaction Form available on the Department's web site: www.corp.ca.gov

Editor's Note:

Click here to view or print this document in PDF format.

* NOTE: The maps to the offices are provided by "Yahoo Maps." The products and services advertised are not promoted or endorsed by California Department of Corporations.