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Franchise Lawyers Serving Rhode Island

What You Need to Know About Franchising

Rhode Island

Rhode Island, though small, is mighty when it comes to attracting new business. Known as the Ocean State, Rhode Island’s export-friendly infrastructure and generous tax incentives have contributed to the economic comeback of the New England region since the Great Recession.

Franchise prospects should know Rhode Island is a franchise registration state. This means you must register your Franchise Disclosure Document (FDD) with the state Department of Business Regulation before offering or selling a franchise there. In Rhode Island, the initial FDD registration fee is $600 and the renewal fee is $300.


Rhode Island Franchise Filing Fees

$600

Initial

$300

Renewal*

$0

Pre-Effective Amendment**

$120

Post-Effective Amendment**

*Renewal filings must be submitted before the expiration date or Rhode Island may 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 Rhode Island until the amended FDD is approved and the registration is effectively amended.

Notes

All Rhode Island initial and renewal filings are submitted online. Payment of the initial and renewal fees are completed online through the state portal, but payment of amendment filing fees must be made via check payable to “Treasury of Rhode Island”.

Electronic payments to Rhode Island may be made via credit card or ACH. For ACH payments, you will be required to complete and submit an ACH authorization form to us before we will submit the filing for you, and the state will charge a $1.50 processing fee for payments submitted via ACH. For credit card payments, you will be required to complete and submit a credit card authorization form to us before we will submit the filing for you. The state will charge processing fees for payments made via credit card in the amount of $15.20 for initial filings and $7.50 for renewal filings.

Rhode Island will accept unaudited financials for first-year startup franchisors but may impose a financial assurance then.

No deals may be closed in Rhode Island until the initial, renewal or amendment filing is approved, and all Rhode Island prospects must be disclosed/redisclosed with the approved FDD. In limited circumstances you may be able to disclose a Rhode Island prospect while a renewal or amendment is pending – please contact your Spadea Lignana legal team for further direction.

Rhode Island filings are typically approved within a month.

Financial Assurance – If you fail to demonstrate financial ability to fulfill your obligations to franchisees, you may be required to place initial fees due to you in escrow. The Director may allow alternatives to escrow.

Did You Know?

In 1790, the Industrial Revolution began in RI with the development and construction of the water-powered cotton mill.

(Rhodeisland.gov)

RI may be the nation’s smallest state, but it has 384 miles of shoreline, including its 35 islands, attracting 24.8 million annual visitors on average.

(mentalfloss.com)

Providence, RI is consistently ranked as one of the most exciting mid-sized cities in America, with some of the youngest, most vibrant residents.

(movoto.com)

Rhode Island Franchise Exemptions

Large Franchisor – exemption from registration only

Large Franchisee – exemption from registration only

Fractional Franchises – exemption from both registration and disclosure

Insiders – exemption from registration only

Sales to Existing Franchisees – exemption from registration only

Renewal of Existing Franchise Agreement – exemption from registration only

Sales by Existing Franchisees – exemption from registration and disclosure

Non-Franchisor Exemptions

Exemptions of Certain Offers Made on the Internet

CORE

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.

Start With a Free Consultation

Attorneys Who Understand RI 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 franchises in Pennsylvania, New York, New Jersey, New Hampshire, Vermont, Maine, Connecticut, and Massachusetts.

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