What You Need to Know About Franchising
While they say “Virginia is for lovers,” it’s also a great place to start a franchise. As a registration state, franchisors must register their franchise disclosure document (FDD) and audited financial statements with the Virginia State Corporation Commission before doing business there.
The franchise law in Virginia is the Retail Franchising Act, which is designed to provide pre-sale disclosure and other protections for prospective franchisees. Another important thing to note: Virginia imposes financial assurance requirements. When submitting your FDD registration (or renewal), the state examiner will review your franchise’s financial statements to determine whether the company is solvent or not. If it is found to be insolvent or in danger of becoming so, your registration may be refused.
Virginia Franchise Filing Fees
$500
Initial
$250
Renewal*
$0
Pre-Effective Amendment**
$100
Post-Effective Amendment**
*Renewal filings must be submitted before the expiration date or Virginia will require the filing be resubmitted as a new initial filing with payment of the initial fee.
**Post-Effective Amendment filings must be submitted if you are making a material change to your FDD after your initial or renewal filing is approved. Pre-Effective Amendment filings are submitted if you are making a material change to your FDD but your initial filing or renewal filing is not yet approved. No further sales may be made in Virginia until the amended FDD is approved and the registration is effectively amended.
Notes
The preferred method for filing in Virginia is through an online portal created by the industry for registration states. The filing fees are also paid through the portal via ACH. You will be required to complete and submit an ACH authorization form to us before we will submit the filing for you. Transaction fees apply for each filing with the current rate being $100 per.
Virginia requires audited financials in every FDD filed in the state. The state may also require the submission of unaudited financials to supplement the audit in certain circumstances.
No deals may be closed in Virginia until the initial, renewal or amendment filing is approved, and all Virginia prospects must be disclosed/redisclosed with the approved FDD.
Financial Assurance – If the Commission finds you do not have adequate financial arrangements to fulfill your obligations to franchisees, the Commission will require an escrow condition, fee deferral or the posting of a surety bond.
The preferred method for filing in Virginia is through an online portal created by the industry for registration states. The filing fees are also paid through the portal via ACH. You will be required to complete and submit an ACH authorization form to us before we will submit the filing for you. Transaction fees apply for each filing with the current rate being $100 per.
Virginia requires audited financials in every FDD filed in the state. The state may also require the submission of unaudited financials to supplement the audit in certain circumstances.
No deals may be closed in Virginia until the initial, renewal or amendment filing is approved, and all Virginia prospects must be disclosed/redisclosed with the approved FDD.
Financial Assurance – If the Commission finds you do not have adequate financial arrangements to fulfill your obligations to franchisees, the Commission will require an escrow condition, fee deferral or the posting of a surety bond.
8.3% of Virginia franchise units are commercial/residential cleaning businesses.
(Franchise.org)
Franchises create 238.2k jobs in Virginia.
(FranchiseEconomy.com)
80% of Virginians have a positive view of family-owned franchises.
(FranchiseEconomy.com)
Virginia Franchise Exemptions
Flat Fee Program for Franchisors
Spadea Lignana’s CORE program for franchisors is a cost-effective and practical solution for the ongoing legal needs of franchisors, including but not limited to, FDD updates, state registrations and franchise agreement executions. Through a proprietary cloud-based system we can effectively and efficiently manage FDD Disclosures and Franchise Agreement executions for fair flat fees billed monthly. We believe that hourly billing, although necessary in certain circumstances like complex M&A deals and litigation, can weigh on the relationship between client and attorney. By coming up with a fair flat monthly fee, the uncomfortable negotiating of whether or not a 6 minute increment in your bill for replying to an email was legitimate goes away.
Attorneys Who Understand VA Franchise Law
Franchise laws vary from state to state, and it can be difficult to understand the requirements. Spadea Lignana has streamlined the process to ensure you remain compliant as you grow nationally.
We also work with franchisors nearby in West Virginia, North Carolina, and Pennsylvania.
