North Carolina Bill Pending Would Add Reporting Requirement For Franchisors

North Carolina has a bill pending that would require franchisors to report certain information about their North Carolina franchisees, similar to the law that was enacted in New York last year. Under the bill, a covered taxpayer would have to file an annual report by May 1 of each year. The annual report would have to include: the gross sale of each franchise located in North Carolina (as each franchisee reported to the franchisor), the total amount of sale by the franchisor to the franchisee itemized by franchisee, and the income of each franchise located in North Carolina (as each franchisee reported to the franchisor).

As written, the bill is vague on the covered franchisors, referring to them only as “taxpayers,” without any further clarification. Therefore it is unclear on whether a franchisor that does not have to file tax returns in North Carolina would be considered a “taxpayer,” although the drafters of the bill probably intended to include all franchisors that have franchises in North Carolina.

House Bill 2001 passed its first reading and was referred to the Committee on Commerce, Small Business, and Entrepreneurship on May 26, 2010.