Fees

$600 Initial
$300 Renewal*
$0 Pre-Effective Amendment**
$120 Post-Effective Amendment**

*Renewal filings must be submitted before the expiration date or Rhode Island may require the filing be resubmitted as a new initial filing with payment of the initial fee.

**Post-Effective Amendment filings must be submitted if you are making a material change to your FDD after your initial or renewal filing is approved.  Pre-Effective Amendment filings are submitted if you are making a material change to your FDD but your initial filing or renewal filing is not yet approved.  No further sales may be made in Rhode Island until the amended FDD is approved and the registration is effectively amended.

Notes

  • All Rhode Island initial and renewal filings are submitted online. Payment of the initial and renewal fees are completed online through the state portal, but payment of amendment filing fees must be made via check payable to “Treasury of Rhode Island”.
  • Electronic payments to Rhode Island may be made via credit card or ACH. For ACH payments, you will be required to complete and submit an ACH authorization form to us before we will submit the filing for you, and the state will charge a $1.50 processing fee for payments submitted via ACH.  For credit card payments, you will be required to complete and submit a credit card authorization form to us before we will submit the filing for you.  The state will charge processing fees for payments made via credit card in the amount of $15.20 for initial filings and $7.50 for renewal filings.
  • Rhode Island will accept unaudited financials for first-year startup franchisors but may impose a financial assurance then.
  • No deals may be closed in Rhode Island until the initial, renewal or amendment filing is approved, and all Rhode Island prospects must be disclosed/redisclosed with the approved FDD. In limited circumstances you may be able to disclose a Rhode Island prospect while a renewal or amendment is pending – please contact your Spadea Lignana legal team for further direction.
  • Rhode Island filings are typically approved within a month.
  • Financial Assurance – If you fail to demonstrate financial ability to fulfill your obligations to franchisees, you may be required to place initial fees due to you in escrow. The Director may allow alternatives to escrow.

Exemptions (from registration with the state and/or from disclosure with a specific prospect)

  • Large Franchisor – exemption from registration only
    • Must meet both a minimum financial threshold and franchise sales requirement
      • Minimum net worth of $10,000,000 (audited) or at least 80% owned by person who guarantees performance and whose most recent audited financials of at least $10,000,000
      • You or the person owning at 80% of you must have at least 25 franchisees that have conducted substantially the same franchised business at not fewer than 25 locations for entire immediately preceding five-year period
      • The prospect must be disclosed with the FDD
      • We must file an annual notice of exemption with the state
    • Notice of exemption form is required to be filed along with the FDD and payment of the $360 filing fee, and the filing must be made annually
  • Large Franchisee – exemption from registration only
    • Must meet both a minimum financial threshold and sophisticated investor requirement
      • Net worth of at least $1,000,000 (including the property of a spouse but excluding primary residence, personal vehicles, and personal effects) or individual or joint income greater than $200,000 in each of the two most recent years with reasonable expectation of reaching the same income level in the current year
      • Has knowledge and experience in financial and business matters that the person is capable of evaluating the merits and risks of the franchise
    • No filing or fees are required
  • Fractional Franchises – exemption from both registration and disclosure
    • Where a franchisee purchases a business with a licensing agreement to conduct your business on the franchisee’s premises and subject to five conditions:
      1. You have two or more years’ experience in an established business of which the franchisee will become a component
      2. The franchised business will be operated from same location as the franchisee’s established existing business
      3. Products or services offered by the franchised business will be substantially similar to the existing products or services offered by the franchise
      4. You and the franchisee anticipate revenue from the franchise will not exceed 20% of the franchisee’s primary business operation in the first year
      5. Franchisee is not controlled by you
    • Notice of exemption form is required to be filed along with the FDD and payment of the $360 filing fee, and the filing must be made annually
  • Insiders – exemption from registration only
    • Where you make an offer or sale of a franchise to a prospect who has an understanding of the franchise system and a franchise offering greater than that of the typical third party
    • Offer or sale must be made to a person for his or her own account and the prospect must have been an officer, director, partner, or affiliate of yours for at least two years
    • No filing or fees are required
  • Sales to Existing Franchisees – exemption from registration only
    • Where an offer or sale is made to/with an existing franchisee of an additional franchise that is substantially the same as the franchise that the franchisee has operated for at least two years at time of offer or sale
    • No filing or fees are required
  • Renewal of Existing Franchise Agreement – exemption from registration only
    • Where the offer or sale involves renewal, extension, modification, or amendment of an existing franchise agreement as long as there is no interruption in the operation of the franchised business and no material change is made in the franchise relationship
    • No filing or fees are required
  • Sales by Existing Franchisees – exemption from registration and disclosure
    • Where the following four conditions apply:
      1. the selling franchisee is not an affiliate or your estate
      2. the offer or sale is made for franchisee’s benefit
      3. the entire franchise is sold
      4. the entire sale is not effected by or through you
    • No filing or fees are required
  • Non-Franchisor Exemptions – The following exemptions are for atypical franchise offerings, are very rare, and in general, will not apply to you if you are an active franchisor with an FDD.
    • Nominal Fee
    • Leased Department
  • Exemptions of Certain Offers Made on the Internet
    • Any communication made by a franchisor through the internet of an offer to sell a franchise if:
      1. the offer is not being offered directly or indirectly to resides of Rhode Island
      2. the offer is not otherwise directed to any person in Rhode Island
      3. no franchises are sold in Rhode Island until the offering has been registered, is effective and the FDD has been disclosed to the prospect in any sale
      4. the communication contains a mechanism designed to reasonably ensure that prior to any subsequent, direct communication with prospective franchisees in the state, you are registered in Rhode Island first or you qualify for an exemption or exclusion
    • No filing or fees are required

Please email fieldguide@spadealaw.com if you have any suggestions, comments, correction or additions for the Field Guide. The purpose of the Field Guide is to create an organic, ever expanding resource of best practices for franchisors and your feedback and input is always welcome.