In the state of Washington, the franchise registrations are renewable annually. If the franchise registration is effective May 15, 2014, it does not expire until May 15, 2015.
The FTC franchise disclosure rule says that the franchise disclosure document [FDD] must be updated 120 days after the fiscal year. Fiscal year ends December 31. That means the FDD must be updated April 30th.
The question is: can you still sell in Washington post April 30th until the registration expires on May 15th?
Here is the FTC Answer as posted in the Amended Franchise Rule FAQ:
Answer: As a matter of enforcement policy, FTC staff would not recommend initiation of an enforcement action against a franchisor that continues – after the 120-day annual update deadline, pending either completion of the state registration of the franchisor’s updated FDD or expiration of the franchisor’s prior registration (whichever comes first) – to make sales in a registration state using an FDD registered in that state. Nevertheless, after the annual update deadline, a franchisor may not use an FDD without updating it to make sales in any state other than a state with a franchise investment law in which the franchisor’s registration remains in effect.
Section 436.7(a) of the Amended Rule establishes a firm deadline for the required annual update and gives a franchisor 120 days after the close of its fiscal year to complete the update. (This is 30 days longer than the original Franchise Rule allowed.) The deadline ensures that prospective franchisees receive a disclosure document that is not stale, since many of the required disclosures provide information only for the prior fiscal year. Consequently, it is important that the annual update deadline be firm.
FTC staff recognizes, however, that although several state registration laws also require annual updates within 120 days after the close of a franchisor’s fiscal year, the time required for completion of the registration process means that registration of an updated FDD may not occur until weeks or months after the deadline. If the Rule’s annual update deadline were inflexibly enforced in those states, it would require a franchisor with a valid registration under state law to stop selling franchises until completion of the registration of its updated FDD. To resolve this tension between the amended Rule and state requirements, FTC staff do not interpret the amended Rule as requiring a franchisor with an FDD validly registered in a state to suspend sales in that state after the update deadline pending either completion of the registration of its updated FDD in that state, or expiration of the existing registration. Nevertheless, to ensure that prospective franchisees receive the most up-to-date information possible in non-registration states, a franchisor must use only an updated FDD after the annual update deadline.
As a matter of enforcement policy, FTC staff would not recommend initiation of an enforcement action against a franchisor. That is comforting. The FTC did not say it is compliant with the rule to continue to use the old FDD in the registration state. So, you are not in conformity with the Rule, but the FTC, as matter of policy, may not decide to go after you?
Better answer: Don’t distribute your old FDD post the 120 days after the close of the fiscal year. If the registration has not expired, submit the registration renewal application early. The FTC is trying to be polite and respectful of the states. But, the Rule is to update 120 days from the fiscal year.