Franchise Builders Says MedSearch Has Done Nothing Wrong
But California Affirms that Offering Franchise Opportunities Requires Registration First SAN DIEGO (Blue MauMau) - The president and CEO of The Franchise Builders, Ralph Massetti, has responded to allegations that a firm that he is helping to franchise, Unlimited MedSearch, is offering 
franchise opportunities illegally by not yet registering in California and other appropriate states. Massetti reassures, "Unlimited MedSearch is currently in the process of completing registrations with all required states."
Bluemaumau.org, an online journal and social media site for franchisee investors, reported Tuesday that California-based MedSearch was soliciting franchise offerings not only through its web site, but also through email targeting New Yorkers.
New York and California Confirm No State Registration Steps Taken from Franchisor Unlimited MedSearch
A spokesperson for the Bureau of Investor Protection & Securities for the state of New York confirmed late Wednesday afternoon that no such registration was in process for Unlimited MedSearch or an affiliated firm, Unlimited NurseSearch.
The state of California also confirmed yesterday that MedSearch had not initiated any registration process.
But Massetti strongly disagrees that there are any problems with Unlimited MedSearch not yet being registered in California or anywhere else. "To infer that a franchisor is negligent for not filing in all registration states on day one of their offering is professionally unrealistic and arguably accusatory," he writes.
Unlawful to Offer Franchise Opportunities to Californians without Registration
Mark Leyes, Director of Communications for California's Department of Corporations, declares, "Most unregistered franchisors will not even set up a booth at a franchise trade show in California because of their concern about making offers that are not registered or exempted."
Leyes declares, "It is unlawful to offer or sell a franchise in California unless the franchise has been registered or exempted." California law stipulates an "offer" to include "every attempt to dispose of, or a solicitation of an offer to buy a franchise or an interest in a franchise," says Leyes.
Although Massetti admits that MedSearch at the moment is not registered in any state, The Franchise Builders' CEO argues that so far there has been no record of intentional solicitation to prospects in unregistered states. No line has been crossed.
California law stipulates that Internet offers of franchise opportunities can be exempt if the site indicates that the franchise is not being offered to California residents or that it is not directed at them.
Despite such state restrictions in marketing to Californians, Unlimited MedSearch has been offering franchise opportunities in online advertisements specifically targeting California residents in San Francisco and Redding.
The firm also has created an ad specifically targeting Chicago, Illinois residents. Illinois is also a registration state in which franchisors are required to register before soliciting franchise opportunities.
Franchise Buyers Should See Red Flag; Franchisor Risks Penalty
Robert Tingler, attorney with the State of Illinois Franchise Division, says firms can face steep financial penalties later when a restitution of investment may be required to be paid to franchise owners.
The state of California agrees with Illinois that this can be a costly miscalculation by franchisors. Mr. Mark Leyes observes that there are possible civil and criminal penalties, including restitution to franchise owners of fees collected.
No matter what the penalties might be to franchisors, having no registration can be a sign to potential franchise buyers of bad things to come on how they might be treated and supported.
Robert Purvin, chairman of the American Association of Franchisees and Dealers, cautions, "From the consumer’s perspective, the sale of an unregistered franchise, unless exempted from regulation requirements of the state where the franchise is being sold, is a red flag that the company is not obeying applicable law and investment in such companies is strongly discouraged."
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