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Franchise Lawyers Serving California

What You Need to Know About Franchising


From the top of the Redwoods down to Coronado Island, California is known as a hub for many small businesses. In total, California is home to over 3.9 million small businesses!

If you are thinking about franchising in the Golden State, it is important to understand the rules and regulations that the state enforces. In addition to complying with the FTC, California is a registration state. This means that franchisors are required to register their FDD with the California Department of Financial Protection and Innovation. The initial FDD registration fee is $675 and the FDD renewal fee is $450.

Note that if you are in your first year of franchising, California will accept reviewed financials instead of audited. California also has a number of exemptions, so working with an attorney who understands franchise law is especially helpful.

California Franchise Filing Fees






Pre-Effective Amendment**


Post-Effective Amendment**

*Renewal filings must be submitted prior to the current registration’s expiration or the state 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 until the amended FDD is approved and the registration is effectively amended.

Overview of Franchise Laws in California

The franchise world is navigated through a comprehensive set of rules and regulations designed to ensure fairness and transparency between franchisors and franchisees. Key regulations include the necessity for franchisors to register their Franchise Disclosure Document (FDD) with the California Department of Financial Protection and Innovation. Since this is a registration state, requiring an initial registration fee of $675 and a renewal fee of $450.

Potential Legal Challenges for Franchisors

Franchisors in the Golden State face several legal challenges, including:

  • Compliance with state-specific disclosure requirements
  • Navigating exemptions that might apply to their franchise
  • Managing renewals and amendments to their FDD in a timely fashion
  • Ensuring advertising meets state guidelines
  • Providing adequate financial assurance as required by the Commissioner

Importance of Legal Counsel in Drafting Franchise Agreements

At Spadea Lignana, we emphasize the critical role of legal counsel in drafting, reviewing, and negotiating franchise agreements. This includes:

  • Assisting with compliance and registration requirements to avoid legal pitfalls
  • Handling negotiations and disputes with franchisees to protect your interests
  • Guiding intellectual property protection and licensing to safeguard your assets

Selecting a Franchise Attorney: Factors to Consider

Choosing the right legal partner is pivotal for franchisors. Consider these factors:

  • Evaluating Experience and Expertise in Franchise Law: Seek attorneys with a proven track record in franchise law.
  • Assessing Track Record and Client Testimonials: Look for positive feedback from previous clients.
  • Understanding the Lawyer’s Approach to Communication and Collaboration: Ensure they are responsive and willing to collaborate closely with you.

Benefits of Hiring a Franchise Attorney

Partnering with a seasoned franchise attorney offers numerous benefits:

  • Minimizes Legal Risks and Potential Liabilities: Ensure your franchise operates within legal frameworks.
  • Ensures Compliance with State and Federal Regulations: Stay updated on evolving laws.
  • Safeguards Intellectual Property Rights and Trade Secrets: Protect your brand and proprietary information.

Frequently Asked Questions for Franchisors

What Are the Typical Costs Associated With Hiring a Franchise Lawyer?

Costs can vary based on the complexity of your needs. Our CORE program offers fair flat fees for ongoing legal needs.

How Long Does It Take to Draft a Franchise Agreement?

The timeline can vary, but with our efficient processes, we aim to streamline the drafting process to meet your business deadlines.

Can a Franchise Lawyer Help With Franchise Expansion and Growth Strategies?

Absolutely. We provide strategic advice on expansion while ensuring compliance with applicable laws.

What Are the Common Legal Pitfalls Franchisors Should Be Aware Of?

Franchisors should be vigilant about registration requirements, advertising guidelines, financial assurance demands, and maintaining up-to-date FDDs. California is one of the more difficult states to register in. In some cases, it can take months to secure an approval. If you want to do deals in The Golden State, the sooner you file the better.

At Spadea Lignana, we understand the intricacies of franchise laws. Our goal is to help you navigate these waters smoothly, ensuring your franchise’s success while minimizing legal risks.

Key Points for California Filings

All filings are submitted online and the filing fees are paid to the state via credit card. You will be required to complete and submit a credit card authorization form to us before we will submit the filing for you.

The California application required for each filing must be notarized.

If you are in your first year of franchising, California will accept Reviewed financials instead of audited. The state may also require the submission of unaudited financials to supplement the reviewed or audited financials in certain circumstances.

After your California renewal filing has been submitted, we will make your newly issued FDD available on your Map for disclosures. The FDD will contain a cover sheet which will explain that while the FDD has been filed with the State of California, it has not yet been approved by the State of California.  No deals may be closed in California until the renewal filing is approved, and all California prospects must be redisclosed with the approved FDD.

Advertising – Any advertising that will be used by you to target prospects in California or will be published and used only in California, must be filed with the state at least three days prior to its first use. If we do not receive a comment or response from the state on the filing in those three days, you are free to use the advertising.

Financial Assurance – If the Commissioner deems you to not have adequate funding to fulfill all your pre-opening obligations to a franchisee, they will require some form of financial assurance be instituted, such as an escrow, impoundment or deferral of initial fees, or the posting of a surety bond.

Did You Know?

Commercial and residential cleaning franchises make up over 7% of the state's franchises.


California has the largest economy of any state in the U.S. and would, by itself, make up the 6th largest economy in the world when competing with other countries.

We Forum

Prior to its statehood, California was an independent country for one month in 1846.

California Franchise Exemptions

Large Franchisors – exemption from registration only

Large Franchisee – exemption from registration and disclosure

Fractional Franchises – exemption from registration and disclosure

Insiders Exemption – exemption from registration and disclosure

Sales to Existing Franchisees – exemption from registration and disclosure

Renewal of an Existing Agreement – exemption from registration and disclosure

Sales by Existing Franchisees – exemption from registration and disclosure

Out-of-State Sales – exemption from registration and disclosure

Negotiated Sales

Experienced Franchisee – exemption from registration and disclosure

Non-Franchisor 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.

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Attorneys Who Understand CA 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 all over the west including Nevada, Oregon, and Arizona.

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