Once your new FDD is issued, you should use only the new document from that point forward. You can no longer use the old FDD, even if it has a live registration in a certain state, as material changes have been incorporated into your new document, and these render your old document dead.
Every year when the new FDD is finalized and completed, we issue it with a new issuance date. It is at this point when all the registration states need to be renewed. While this can be a quick process in some states, it is very often a months-long process in other states. You will notice some states on your Map are now red, indicating you can’t make disclosures in those states and therefore no new deals can be closed. You have effectively “gone dark” in those states until we get your new FDD approved and the registration renewed. You should be cognizant of the sales you have in the pipeline, because if you have a deal that is very near to closing, you may want to delay the issuance of your new FDD by a few days or a week so you can close that sale first. This is because once we issue the new FDD, any prospects with whom you have not closed a deal must be redisclosed with the new FDD. This is true for prospects in all states – non-filing/non-registration states, also! Once your new FDD is issued, you must redisclose everyone in your pipeline and wait the requisite 14-day period before you can sign an agreement. (Remember, your old FDD is dead upon the issuance of your new FDD!) You should communicate with us regarding any deals in your pipeline as we approach the final punch list items on your FDD updates. Together we can come up with a game plan that makes sense for you.
On the other hand, when thinking about renewing in the registration states, remember this is typically a first-come, first-serve situation. You don’t want to cost yourself weeks, or even months in delays in some states, waiting for approvals because you delayed issuing your new FDD to save one sale. Remember, you are in a race against every other franchisor to file your renewals in the registration states!
In certain situations, and in certain states, you may be able to use the old FDD for informational purposes with a prospect – provided you still have a live registration in that state. For example, let’s say you have a registration in Virginia with an effective date of July 1, but you updated and issued your new FDD before April 30. The old FDD is still under live registration in Virginia, but you can’t close a deal using it because you have a newly issued FDD, and that old FDD was considered expired federally on April 30. While you may be able to share the old FDD with a Virginia prospect before your new FDD is approved and the registration is renewed, you will still be required to redisclose that prospect with the new FDD once it is approved.
Think of it in terms of a soft-shell crab – there is always a small period of time when you’ve lost your hard shell and you’re vulnerable…walking around, just waiting for your new hard shell to form. With your FDD, there will be a period of time when you will be dark for a number of days or weeks in some registration states – where you cannot close a deal and sign a franchise agreement. Like a soft-shell crab, this in-between period is when you are the most vulnerable, and it is the time when you are most likely to make a mistake by closing a deal with a stale FDD. Pay attention to your Map, and let it guide you where you can and cannot disclose and close sales. We will always have the most current information available to you on your Map, but of course, if there is any doubt, be sure to reach out to your Spadea legal team!
When we issue your new FDD, make it part of your process to redisclose each prospect in your pipeline by sending a new email with your map link to each of them. This is the best way to ensure the clock has been restarted and when you and they are ready to sign an agreement, there will be no delay due to a stale disclosure.