FINANCIAL INSTITUTIONS

(Securities Division)

[Filed March 27, 2019, 3:14 p.m., effective April 27, 2019]

Effective Date of Rule: Thirty-one days after filing.

Purpose: The securities division hereby amends chapter 460-80 WAC to require the filing of applications for registration of franchise offerings and franchise brokers, as well as for franchise exemption notice filings, to be made through the securities division's electronic franchise filing system. The amendments affect WAC 460-80-100, 460-80-110, 460-80-125, and 460-80-135. The division is also adopting new WAC 460-80-138, which provides instructions on how franchise broker license applications must be filed.

Citation of Rules Affected by this Order: New WAC 460-80-138; and amending WAC 460-80-100, 460-80-110, 460-80-125, and 460-80-135.

Statutory Authority for Adoption: RCW 19.100.250.

Adopted under notice filed as WSR 19-05-085 on February 20, 2019.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at the Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's own Initiative: New 1, Amended 4, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.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: March 27, 2019.

AMENDATORY SECTION(Amending WSR 09-22-050, filed 10/29/09, effective 11/29/09)

WAC 460-80-100Notice of claim for exemption.

Any franchisor or subfranchisor who claims an exemption under RCW 19.100.030 (4)(a) and (b)(i) shall file with the director a completed Annual Notice of Claim of Exemption form along with the fee prescribed in RCW 19.100.240 made payable to the treasurer of the state of Washington. The annual notice of claim of exemption shall be filed through the online franchise filing system administered by the director.

AMENDATORY SECTION(Amending WSR 09-22-050, filed 10/29/09, effective 11/29/09)

WAC 460-80-110Franchise registration application.

All applications for registration, renewal or amendment of a franchise shall be in the form as provided by the director and contain the information specified therein. The application for registration, renewal or amendment must be accompanied by the fee prescribed in RCW 19.100.240 made payable to the treasurer of the state of Washington. All applications for registration, renewal, or amendment of a franchise shall be filed through the online franchise filing system administered by the director.

AMENDATORY SECTION(Amending WSR 09-22-050, filed 10/29/09, effective 11/29/09)

WAC 460-80-125Franchise registration application instructions.

The following must be adhered to with respect to all applications for registration, registration renewal or registration amendment:

(1) Completion of application. An application for registration of the offer or sale of franchises shall include the following, all of which shall be verified by means of the prescribed signature page:

(a) Application;

(b) Supplemental information page(s);

(d) A copy of the Franchise Disclosure Document.

(2) The following shall be attached to the application:

(a) A consent to service of process; and

(b) One copy of any advertising to be used in connection with the offer or sale in this state of franchises.

(3) Submission of application. All applications for registration, renewal, or amendment of a franchise shall be filed through the online franchise filing system administered by the director.

(4) Disclosure: The offering circular shall be prepared in accordance with the Instructions for Preparation of the Franchise Disclosure Document contained in section IV. of the 2008 Franchise Registration and Disclosure Guidelines promulgated by the North American Securities Administrators Association, Inc. (NASAA).

(((4)))(5) Subfranchisors: When the person filing the application for registration is a subfranchisor, the application shall also include the same information concerning the subfranchisor as is required from the franchisor; the franchisor, as well as the subfranchisor, shall execute a signature page.

(((5)))(6) Signing of application: The application shall be signed by an officer or general partner of the applicant; however, it may be signed by another person holding a power of attorney for such purposes from the applicant. If signed on behalf of the applicant pursuant to such power of attorney, the application shall include as an additional exhibit a copy of said power of attorney or a copy of the corporate resolution authorizing the attorney to act.

(((6)))(7) Manually or digitally signed consent of accountant: All applications shall be accompanied by a manually or digitally signed consent of the independent public accountants for the use of their audited financial statements as such statements appear in the offering circular.

AMENDATORY SECTION(Amending WSR 09-22-050, filed 10/29/09, effective 11/29/09)

WAC 460-80-135Franchise registration amendment and renewal instructions.

An application to renew or amend a franchise registration must comply with the following requirements:

(1) An application for renewal of a franchise registration must be filed with the director no later than fifteen business days prior to the expiration of registration in order to avoid a lapse in registration and the need to file an initial application for registration. If the registration has already expired, the applicant must mark the application as an initial registration and pay the fee required for filing an initial application for registration in RCW 19.100.240.

(2) An amendment to a franchise application is required to be filed as soon as reasonably possible and in any case, before the further sale of any franchise, if a material adverse change in the condition of the franchisor or any of its subfranchisors or any material change in the information contained in its Franchise Disclosure Document should occur.

(3) The following documents must be filed for each amendment or application for renewal of a franchise registration:

(a) A completed application marked amendment or renewal, as applicable. If the application is for renewal, do not mark the amendment boxes on the application even if the documents have been revised since the last filing.

(b) All documents set forth in WAC 460-80-125 required for an initial application with all additions, deletions and other changes to the previously filed documents black-lined. Changes must be clearly marked so that each change is noticed easily. Do not use margin balloons or color highlights to show changes. Do not use less than 11 point type for changed text. Use a black-lining system that underlines changes and shows deletions by a strike through.

(4) If the director requires changes to any documents submitted, the franchisor must file a complete clean copy of the revised Franchise Disclosure Document and any other revised documents, and a black-lined copy of all the revised pages, unless directed otherwise.

(5) All applications for renewal or amendment of a franchise shall be filed through the online franchise filing system administered by the director.

WAC 460-80-138Franchise broker license application instructions.

All applications for initial registration or renewal of a franchise broker license shall be filed through the online franchise filing system administered by the director.