Regulation in Wisconsin
Chapter 553 of the Wisconsin Statutes , the "Wisconsin Franchise Investment Law," was adopted in 1972 and was administered by the Office of the Commissioner of Securities. The focus of that Law was Sec. 553.21, Wis. Stats., which stated: "No person may sell or offer in this state any franchise unless the offer of the franchise has been registered under this chapter or exempted."
Under the 1972 Law, most franchisors were required to file their offering circulars with the Office prior to any offer or sale of the franchises in this state. Through the rule-making authority of the Commissioner, the staff of the Commissioner's Office reviewed the offering circulars and required compliance with the disclosure standards of then- applicable NASAA Guidelines as a condition of registration in Wisconsin.
July 1, 1996 saw major changes to franchise regulation in Wisconsin. First, the Office of the Commissioner of Securities became the Division of Securities within the newly created Department of Financial Institutions. Second, Chapter 553, Wis. Stats., was amended to eliminate the authority of the Division to perform any review of a franchise filing prior to registration in Wisconsin. The registration requirement still continues to exist, but only as a notice filing, and a filing is required only prior to any sales being made in Wisconsin, such that the offer of a franchise is no longer covered by the registration requirement. Franchisors continue to be required to provide a disclosure document to prospective franchisees, but no regulatory review of the document takes place in Wisconsin. However, disclosure documents must be prepared in compliance with the NASAA Guidelines and or FTC Rules per Wis. Stat. §§ 553.26 and 553.27 and § DFI Sec. 32.06, Wis. Admin. Code, to avoid anti-fraud issues under Ch. 553.
On January 23, 2007, FTC adopted a final, amended Franchise Rule ("Amended FTC Franchise Rule"). 16 C.F.R. Part 436. Under it, as of July 1, 2008, all franchisors must prepare and distribute disclosure documents that, at a minimum, comply with the Amended FTC Franchise Rule’s disclosure format [labeled the "Uniform Franchise Disclosure Document” (“UFDD”)]. Consequently, the UFOC, as promulgated by NASAA, that had been used since 1993 by most franchisors as the disclosure document in connection with the offer and sale of franchises, cannot be used in Wisconsin or any other state jurisdiction after July 1, 2008.
However, under the Amended FTC Franchise Rule, states may impose additional disclosure requirements under state law consistent with the Amended FTC Franchise Rule.
Using that ability to impose additional, not-inconsistent, state requirements, NASAA developed (during 2007 and 2008) and adopted in June 2008 for use by NASAA franchise jurisdictions, the disclosure requirements of the Amended FTC Franchise Rule, with minimal additional requirements, as the successor to the UFOC Guidelines. A link to the NASAA-adopted Amended FTC Franchise Rule and Disclosure Guidelines is on our Useful Links page. The revised NASAA Franchise Registration and Disclosure Guidelines thus replace as of July 1, 2008, the former NASAA UFOC Guidelines
Therefore, as of July 1, 2008, Wisconsin will only accept registration filings containing Franchise Disclosure Documents prepared under the Amended FTC Franchise Rule, or under the revised NASAA Registration and Disclosure Guidelines in accordance with its related Instructions. Also, a franchisor registered in Wisconsin as of July 1, 2008 must use one or the other of such disclosure documents to offer and sell their franchises in Wisconsin -- which may require a post-effective filing with the Division of the required disclosure document (unless the franchisor previously has filed such).
The Division continues to administer Chapter 553. Wis. Stats., focusing its resources on detection and prosecution of fraud in the offer and sale of franchises, education of prospective franchisees, and assistance to persons seeking to comply with the Wisconsin Franchise Investment Law.
Note: The Fair Dealership Law (Chapter 135, Wis. Stats., as summarized earlier) remains in effect. That Law contains provisions that may supersede those contracted to between franchisor and franchisee.