Why? Because federal and New York rules impose hard deadlines tied to a business’s fiscal year-end.
January is widely considered the start of “tax season” (largely for personal finances). Franchisors who also consider the month the start of “FDD season” will benefit by keeping their franchise registration continuous, their sales team compliant, and the disclosures aligned with how the system currently operates.
Federal Update Deadlines
Under the Federal Trade Commission’s (FTC) Franchise Rule, all information in your FDD must be current as of the close of your most recent fiscal year. The Rule then requires you to prepare a revised disclosure document within 120 days after the fiscal year-end, after which you may distribute only the revised FDD.
For franchisors using a calendar fiscal year, this means your current FDD will expire on April 30, 2026, if it is not updated and reissued by then. The first quarter of the year is therefore the ideal time to begin the process of franchise disclosure document review for franchisors; this is the window to collect updated data, finalize audited financials, and have counsel revise the FDD so there is no gap in your ability to offer franchises.
What’s Included in the FDD
A compliant FDD will accurately reflect the franchisor, the franchise system, and the franchisee’s initial investment across 23 mandated disclosure items. Among these items are background information, leadership history, litigation and bankruptcy, all fees and estimated initial investment, territory rights, trademarks, system standards, and the financial statements you present to prospects. This is a time to make changes – particularly to match an evolving corporate strategy.
The FTC Rule also requires quarterly updates when there is a material change, and any annual update must incorporate the first quarterly update. If your system experienced changes in fees, support programs, litigation, financial performance representations, openings/closures, or capital structure, January is the month to chronicle those developments and ensure they are fully reflected before the spring selling season.
Franchisors must also obtain audited financial statements conducted by an outside firm (not the company or individual who manages your financials). This audit can be time consuming, especially if the franchisor has several franchisees and locations. Franchise lawyers can refer dependable auditors, but should be doing so in January or February (at the latest) to make the April deadline.
A Note on New York Registration Requirements
New York is one of 13 franchise registration states in the U.S., and franchisors must register their FDD with the Office of the Attorney General before offering or selling franchises in the state. New York requires annual registration, which expires 120 days after the franchisor’s fiscal year-end.
The NY Attorney General now requires that all franchise filings and associated fee payments be submitted through the North American Securities Administrators Association’s (NASAA) Franchise Electronic Filing Depository (FRED), unless doing so would be a hardship. In August 2025, NASAA released new guidance clarifying the evolving material changes—such as shifts in economic conditions, supply chains, or key costs—that may require franchisors to amend their FDDs well before the next scheduled annual filing.
Starting the renewal process in January provides ample time to update the FDD, coordinate the FRED filing, respond to any comments, and avoid a lapse in New York registration that could cause a pause in franchise sales.
Consequences of Letting the FDD “Slip” in a Registration State
If your FDD is not updated within 120 days of the fiscal year-end, federal law may deem it noncompliant. Continuing to use it can expose you to regulatory enforcement and franchisee claims. In New York, attempting to offer or sell franchises without an effective, updated registration may trigger action by NY’s Investor Protection Bureau and provide franchisees with powerful remedies.
Beyond regulatory risk, an outdated FDD undermines franchisee confidence and may misstate critical economics or obligations, which in turn can lead to disputes and system instability. Complying with renewal deadlines demonstrates that your brand takes disclosure seriously and treats accurate, transparent information as a core part of its franchise relationship.
For January 2026, engaging counsel early allows time to review audited financials, update risk factors and litigation, revise financial performance representations, and coordinate FRED submissions. This will ensure your New York registration remains seamless. By starting now, franchisors can enter the 2026 selling season with a current, compliant FDD that supports sustainable expansion in the U.S.
How Lusthaus Law Can Help in 2026
Lusthaus Law has extensive experience guiding franchisors through drafting, updating, and registering FDDs in New York and other registration states. The firm works closely with clients to ensure that the FDD’s 23 Items are accurate, consistent with current operations, and tailored to the brand’s growth and risk profile.
Of course, franchisees also have their work cut out for them. As recently discussed, franchise agreements run for a fixed term, often five or 10 years, depending on the industry. Franchisees who executed agreements in 2016 or 2021 should confirm renewal deadlines with their franchise attorney.
Contact Lusthaus Law
Lusthaus Law’s website is a resource for franchisors and franchisees. You can read our consistent coverage of the legal and regulatory updates that impact franchising.
We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.
