WSR 15-10-011 PERMANENT RULES DEPARTMENT OF FINANCIAL INSTITUTIONS (Securities Division) [Filed April 23, 2015, 11:48 a.m., effective May 24, 2015] Effective Date of Rule: Thirty-one days after filing.
Purpose: The Washington Franchise Investment Protection Act requires delivery of a franchise disclosure document at least fourteen calendar days prior to the execution by the prospective franchisee of any binding franchise or other agreement, or at least fourteen calendar days before the prospective franchisee signs a binding agreement with, or makes any payment to, the franchisor or an affiliate in connection with the proposed franchise sale. To better coordinate the securities division's rules with other federal and state laws that regulate the offer and sale of franchises, the securities division is now adopting the Statement of Policy Regarding Electronic Delivery of Franchise Disclosure Documents promulgated by the North American Securities Administrators Association on September 14, 2003, in order to explicitly allow electronic delivery of Franchise Disclosure Documents. The proposed amended rule also reflects franchisors' practices in delivering electronic disclosure in reliance on the federal E-SIGN Act.
Citation of Existing Rules Affected by this Order: Amending WAC 460-80-300.
Statutory Authority for Adoption: RCW 19.100.080, 19.100.250.
Adopted under notice filed as WSR 15-05-002 on February 4, 2015.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: April 23, 2015.
Scott Jarvis
Director
AMENDATORY SECTION (Amending WSR 09-22-050, filed 10/29/09, effective 11/29/09)
WAC 460-80-300 Delivery and receipt of offering circular.
(1) Each person that sells a franchise that is registered or required to be registered pursuant to RCW 19.100.020 shall ensure that the Franchise Disclosure Document and other required documents are delivered to each offeree in accordance with RCW 19.100.080 and shall obtain a signed receipt therefore in the form prescribed by the director.
(2) A franchisor may deliver a Franchise Disclosure Document over the internet or by other electronic means, or in machine-readable media, provided:
(a) The Franchise Disclosure Document:
(i) Is delivered as a single, integrated document or file;
(ii) Has no extraneous content beyond what is required or permitted by law and by the 2008 Franchise Registration and Disclosure Guidelines promulgated by NASAA, but which may include customary devices for manipulating electronic documents in machine readable form and tools, or access to tools, that may be necessary or convenient to enable the recipient to receive and view the Franchise Disclosure Document;
(iii) Has no links to or from external documents or content;
(iv) Is delivered in a form that intrinsically enables the recipient to store, retrieve, and print the Franchise Disclosure Document; and
(v) Conforms as to its content and format to the requirements of law.
(b) The franchisor:
(i) Can prove that it delivered the Franchise Disclosure Document electronically in compliance with this section, and that it did so at or before the time required by law; and
(ii) Keeps records of its electronic delivery of Franchise Disclosure Documents and makes those records available on demand by the administrator.
(3) "Delivery" requires that the Franchise Disclosure Document be conveyed to and received by the prospective franchisee, or that the storage media in which the Franchise Disclosure Document is stored be physically delivered to the prospective franchisee in accordance with subsection (2)(a) of this section.
(4) This section does not change or waive any other requirement of law concerning registration or presale disclosure of franchise offerings.
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