The Virginia Division of Securities and Retail Franchising has recommended to the Virgina Corporations Commission certain revisions to the "Virginia Retail Franchising Act Rules" (Rules). The changes are slated for adoption on March 1, 2013.
The majority of the proposed changes to the Rules appear to be minor and intended to bring Virginia's Rules in line with the North American Securities Administrators Association (NASAA) Guidelines. The full text of the changes are contained in the Order to Take Notice and include:
- making it mandatory for a franchisor to file its FDD in CD-ROM format (currently filing in CD-ROM format is optional);
- requiring franchisors to file amendments to a registration within 30 days of a material change;
- requiring that there is no "going concern paragraph" in an audit report of any franchisor taking advantage of the "seasoned franchisor exemption";
- requiring franchisors to retain and make available upon request, copies of each materially different version of the franchisor's FDD for 3 years; and
- adopting the NASAA "Guarantee of Performance" form.
The Virgina Corporations Commission issued a period to receive public comment and/or hearing requests with respect to the Rule changes which will end on January 15, 2013. Comments or requests for hearing must be submitted in writing to the Clerk of the Commission Joel H. Peck, c/o Document Control Center, P.O. Box 2118, Richmond, Virgina 23218 or electronically by following the instructions available on the website http://www.scc.virginia.gov/case.
If you do franchise business in Virginia, or think that you might soon, we strongly recommend that you consider reviewing these proposed Rule changes, and submitting comments if appropriate.