Texas Franchise Law and FDD Registration

Texas has not enacted franchise laws but has enacted business opportunity laws, and the Texas Secretary of State regulates and oversees the enforcement of the Texas Business Opportunity Act.

The definition of a “business opportunity” under the Texas Business Opportunity Act is broad and includes franchise relationships. However, if you maintain a current and valid FDD and are in compliance with the Federal Franchise Rule (learn more about the Federal Franchise Rule) and the FTC’s FDD disclosure requirements, you may claim an exemption to the business opportunity laws. Once an exemption notice is filed, you will be in compliance with Texas’s business opportunity laws.

You are required to file the Business Opportunity Exemption Notice that is referred to as Form 2703. When filed, it provides the Texas Secretary of State with the required information necessary to claim an exemption to the Business Opportunity Investment Act. Information included in the exemption notice:

• The name of your franchise company;
• Any assumed names of your franchise system;
• The principal business address of your franchise company;
• Authorized signature affirming that your franchise offering is in compliance with the Federal Franchise Rule and regulations issued by the FTC; and
• Check payable to the Secretary of State in the amount of $25, representing the exemption notice filing fee.

Business opportunity exemption notices are sent to:

Texas Secretary of State
Registrations Unit
P.O. Box 13193
Austin, TX 787-3193

Then the exemption will be invalid, and you will be required to comply with the Texas Business Opportunity Act, which requires registration of your business opportunity and a pre-sale disclosure process.