Canadian franchisors entering the US market already understand that franchise compliance doesn’t end after launch. Managing annual filings in Ontario or Alberta has taught you that much. The US system operates at a different scale than what you’re managing back home, but the good news is that with the right systems in place, it’s entirely manageable.
Here’s what to expect as you grow your US presence.
Annual updates keep your system current
Under federal law, you must update your FDD within 120 days after your fiscal year end. This is 60 days tighter than the 180-day window you have in Canada for financial statement updates. In Canadian provinces with franchise disclosure laws, franchisors have 180 days from their fiscal year end to update financial statements in their disclosure documents.
Think of this as your annual opportunity to refresh your offering. You’ll update your operations manual table of contents, reflect any fee adjustments, show your growth in Item 20 tables, and ensure your entire disclosure package accurately represents where your system is today.
Registration states each have their own renewal requirements and deadlines. It means tracking multiple calendars, but it also means you’re maintaining active registrations in the states that matter most to your growth strategy.
Material changes keep franchisees informed
The FTC requires you to amend your FDD following a material change within a “reasonable time” after the close of the quarter in which the material event occurred. A material change is anything that would substantially influence a prospective franchisee’s decision.
Examples include a lawsuit against the franchisor for fraud, loan default, or a change in ownership. Substantial increases or decreases in fees or initial investment, changes to the franchisor’s financial condition, modifications to territorial rights, or alterations to training programs can all trigger the requirement.
For growing franchisors, material changes often reflect positive developments. You’re signing new franchisees. Adjusting your model based on market feedback. Opening new territories. Start-up franchisors see this especially often because when you only have a small number of franchisees, even small changes become significant. Each update keeps your disclosure current and builds trust with prospects who appreciate transparency.
One important exception: financial performance changes
If your material change relates to financial performance representations in Item 19, you must notify prospective franchisees immediately, not at quarter end. This ensures candidates always have the most current performance data when making their investment decision.
State registrations reflect your growth
Every time you amend your FDD for a material change, the amended document must also be filed in any registration states where you’re approved to sell franchises. Yes, this means a single federal amendment can trigger multiple state filings. But it also means you’re maintaining your ability to recruit franchisees across some of the largest, most lucrative markets in North America.
Each state examiner reviews your amended filing to ensure compliance with their specific requirements. While the process can take time, having systems that track where you can sell and when registrations expire makes this significantly smoother. At Spadea Lignana Franchise Attorneys, our proprietary cloud-based system provides Canadian franchisors with real-time visibility into their state registration status. A simple red/green interface shows at a glance where you’re approved to sell and where renewals are coming due.
Building compliance into your operations
Even if you’re not actively selling new franchises at the moment, the legal requirements for updating an FDD still exist. The key is treating compliance as an ongoing operational function rather than a one-time project.
Successful Canadian franchisors typically budget for quarterly check-ins to assess whether amendments are needed, dedicate time for annual updates, and work with counsel who manage state registration tracking. With proper systems, what seems overwhelming at first becomes routine.
The payoff
The US market offers access to over 330 million potential customers across diverse demographics and regions. The compliance framework exists to protect franchisees and maintain system integrity, goals that align with building a strong, sustainable franchise system.
Understanding these ongoing requirements helps you budget appropriately, staff correctly, and build the infrastructure for long-term success. Canadian franchisors who plan for this reality from day one find that staying compliant becomes a competitive advantage, demonstrating to prospects that you run a professional, well-managed organization worth joining.
