Rarely are the terms “law” and “early adopter of technology” found in the same sentence. This certainly is true as to some aspects of franchise regulation. Whereas most businesses regularly send and receive documents electronically, most state franchise registration forms still are filed the old-fashioned way – by mail or other physical delivery.
As of January, 2010, however, the Wisconsin Department of Financial Institutions (“WDFI”) got ahead of the curve and began accepting electronic filings of franchise registration and amendment forms. These forms are required to be filed with the department under Chapter 553 of the Wisconsin Statutes, the Wisconsin Franchise Investment Law. According to the WDFI website, Wisconsin was the first state to accept such electronic filings.
A representative of WDFI says that about one-half of Wisconsin franchisor registrants currently utilize the electronic filing system. To use the system, a registrant clicks on a link on the DFI website, completes a form about the franchisor, attaches a .pdf copy of the filed documents and pays the applicable filing fee by credit card.
WDFI has no immediate plans to mandate electronic filing of Wisconsin franchise registration and amendment forms. Thus, franchisors may opt to file registrations or amendments electronically or may do soby physical delivery, such as by mail or other carrier.
Given the ease and lower cost of filing electronically, why wouldn’t a franchisor utilize the electronic filing system? One likely reason is that electronically filed documents (including franchise disclosure documents) may be downloaded from WDFI’s website. Documents that are delivered by mail or other physical delivery, however, are not scanned and made available for download on the WDFI website. While third parties can visit WDFI’s offices and obtain a copy of a franchisor’s file, the inconvenience and expense of doing so make it less likely that someone will undertake the effort. Franchisors who wish to limit disclosure of their franchise disclosure documents thus may prefer to utilize mail or physical delivery.
But as will be discussed in a future post on this blog, there are other means to obtain copies of franchise disclosure documents filed by national franchisors. The North American Securities Administrators Association (NASAA) is also considering issues regarding the use of electronic filing. Although Wisconsin’s electronic filing system may be unique for now, it’s inevitable that other states will follow Wisconsin’s lead. And who knows — in the not-too-distant future, all franchise regulatory filings may be made electronically.