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Log In / Register | Apr 23, 2014

Washington State Considers Electronic Franchise Disclosure Documents

electronic spreadsheetOLYMPIA, Wash.— The state of Washington, the high tech forest for firms such as Microsoft, Amazon and Expedia, is considering the appropriateness of entering the digital age when it comes to franchise disclosure documents. Its Securities Division wants feedback from members of the franchise industry in the state on whether it should allow the electronic receipt of franchise disclosure documents from franchisors and the delivery of the electronic documents to potential franchisees.

The problem up to now has been that neither the Washington State Franchise Investment Protection Act nor the Securities Division's rules have explicitly allowed a franchisor to provide the Franchise Disclosure Document electronically to prospective franchisees. On September 14, 2003, the North American Securities Administrators Association (NASAA) approved a Statement of Policy Regarding Electronic Delivery of Franchise Disclosure Documents.  This Statement of Policy provided text for proposed state regulation regarding electronic delivery by franchisors of Franchise Disclosure Documents to franchisees.  On January 22, 2007, the Federal Trade Commission (FTC) adopted amendments to its Franchise Rule that explicitly allowed electronic delivery of Franchise Disclosure Documents.

The Securities Division recognizes that explicitly allowing for electronic disclosure of franchise disclosure documents may benefit prospective franchisees by making franchise disclosure documents more readily available and more readable. Allowing electronic disclosure also benefits franchisors by reducing costs associated with reproduction and delivery of disclosure materials. As the amendments considered by the Division reflect the language of the NASAA Statement of Policy, and the FTC rules similarly allow for electronic delivery of Franchise Disclosure Documents, the amendments under consideration would better coordinate the Securities Division's rules with other federal or state agencies.

Accordingly, the Securities Division is exploring amending its regulations regarding delivery and receipt of Franchise Disclosure Documents to allow for electronic delivery. In particular, the rule affected is WAC 460-80-300.  A copy of the Preproposal Statement of Inquiry is attached (pdf).

Questions may be directed to Michelle Webster at [email protected] or 360-902-9736.

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WSR 14-03-063.pdf99.13 KB
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