NASAA’s Proposed FDD Cover Page Changes: Helpful or Misleading?

The North American Securities Administrators Association, Inc. (“NASAA”) is proposing to revise the instructions in the NASAA Franchise Registration and Disclosure Guidelines (the “Guidelines”) that outline policies and procedures regarding the preparation of a franchise disclosure document (“FDD”). Specifically, NASAA has set forth a proposal for public comment that replaces the “State Cover Page”  to the FDD with three separate pages titled “How to Use this Franchise Disclosure Document”, “What You Need to Know About Franchising, Generally”, and “Special Risks to Consider about This Franchise.” Currently, the Guidelines require that the State Cover Page include certain standard “risk factors” about the franchised business being offered under the FDD, including dispute resolution procedures, governing law, and personal guaranty requirements. Additionally, registration state…

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