Virginia Clarifies Requirement for Current Financial Statements In FDD

Virginia made a change to the Regulations under its Retail Franchising Act, effective July 1, 2010. The new requirement is that the audited financial statements must be current within 120 days of the date of filing for initial or renewal franchise registrations. If the audited financial statements are not current within this time period, the franchisor must include in its FDD the franchisor’s unaudited financial statements that are current within 120 days. The unaudited financial statements must be prepared in accordance with generally accepted accounting practices.

Since many states already have this requirement, the Virginia change should not present any new problems for franchisors desiring to register or renew a registration in Virginia. You simply must remember to include the unaudited statements in your FDD if your audited financial statements are dated more than 120 days before the date you file your initial or renewal registration.