It is again that time of year for most franchisors: FDD update season. If you’re a Canadian franchisor with U.S. operations, keeping your Franchise Disclosure Document (FDD) up to date is essential for legal compliance and smooth business growth. Here’s a straightforward guide to help you stay on track.
Key requirements and deadlines
- Annual renewal: Every year, you must update your FDD within 120 days after your fiscal year ends. For most franchisors, this means by April 30 if your fiscal year-end is December 31.
- State-specific deadlines: Some states have shorter deadlines (for example, California: 110 days; Hawaii: 90 days). If you operate in multiple states, track each deadline carefully.
- Material changes: If anything significant changes—such as your management team, fees, or financials—you may need to update your FDD immediately, not just at renewal time.
- What happens if you miss a deadline? If your updated FDD is not issued on time, you must stop selling or marketing franchises until your FDD is updated and, if required, re-registered. Missing deadlines in certain states can result in additional fees, longer wait times, and potential legal exposure if you continue engaging with franchise candidates after your FDD has expired.
U.S. franchise laws are complex and vary by state. Even if you are familiar with Canadian regulations, the U.S. system has its own rules, deadlines, and disclosure requirements. Working with experienced U.S. franchise counsel is essential to ensure your documents are complete, compliant, and properly filed.
Why start early?
Renewing your FDD is not simply a matter of updating a few pages. The process usually includes:
- Gathering financial statements: Audited financials can take time, particularly if you had significant activity during the year and need to coordinate with accountants.
- Reviewing business changes: You must reflect updates to fees, management, litigation, or other material developments.
- Meeting multiple deadlines: Different states have different renewal timelines. Starting early helps you avoid last-minute issues and potential blackout periods during which you cannot sell franchises.
- Allowing time for legal review: Legal counsel needs adequate time to review your documents, suggest improvements, and confirm compliance.
Bottom line: Starting early and working with knowledgeable U.S. counsel reduces risk, minimizes delays, and creates a smoother renewal process—allowing you to focus on growing your U.S. franchise network.
Tips and best practices
- Start early: Begin preparing your FDD renewal at least two to three months before it is due. Start your financial audit early, as this is a common source of delays.
- Keep a running list: Track changes throughout the year rather than waiting until renewal time.
- Coordinate filings: Know the deadlines for each state and file early to avoid last-minute stress.
- Use renewal as a check-up: Review your FDD for business updates as well as legal changes.
- Communicate with your team: Ensure your sales and operations teams understand when the FDD is being updated and what has changed.
- Get legal advice: Consult an experienced U.S. franchise lawyer to guide you through the update and renewal process.
Why it matters
Staying on top of FDD renewals keeps you compliant, protects your brand, and supports smooth expansion in the U.S. Treat the renewal process as an opportunity to strengthen your business, not just a legal obligation.
Quick checklist
- Track federal and state deadlines
- Update for major changes as soon as possible with U.S. franchise counsel
- Start the renewal process early
- Communicate updates internally
