The franchise laws are a combination of federal and state laws that govern the registration, offer and sale of franchises, and the legal relationship between franchisors and franchisees. The Federal Franchise Rule is the overarching federal franchise law that governs all franchise transactions throughout the United States, in all fifty states. The Federal Franchise Rule is enforced by the Federal Trade Commission and the central requirement of the Federal Franchise Rule and the FTC’s enforcement activities relate to a franchisor’s disclosure of a franchise disclosure document prior to the offer or sale of any franchise.
The Federal Franchise Rule sets the minimum standards for a franchisor’s disclosure obligations and leaves open to each individual state the option to supplement the federal law with state specific franchise laws and requirements. In addition to the Federal Franchise Rule, franchise laws are also comprised of state specific franchise laws and regulation relating to a franchisor’s disclosure obligations, the relationship between franchisor and franchisee and the review and registration franchise disclosure documents.
States that require the registration of a FDD with the local state administrator are known as “franchise registration states”. States that require the filing of a notice or exemption request with a state administrator – but not the registration or filing of a FDD – are known as “franchise filing states“. States that require neither registration nor a filing are typically referred to as “non-registration states”. For additional information about state franchise laws, whether or not a state is a franchise registration state, a filing state, or a non-registration state and the applicable laws of each state, visit state specific franchise laws page.
Within almost every franchise agreement is a choice of law provision where franchisor and franchisee typically agree that the laws of the state where the franchisor is located governs. When it comes to properly disclosing a FDD, at all times, a franchisor must comply with the Federal Franchise Rule and the federal FDD disclosure obligations. When a franchise transaction involves a particular state (i.e., the franchisor is selling franchises from within a particular state, a prospective franchisee is a resident of a particular state, the franchisor is a resident of a particular state or the franchised business will be located within a particular state) then the respective state franchise laws will also govern.
At the federal level the Federal Franchise Rule does not require that a franchisor register or file its FDD with the FTC or any other federal agency. Under federal law a Franchisor must monitor its own internal compliance and ensure that it properly prepares, maintains, issues and discloses its FDD in accordance with the requirements of federal law. If the franchise transaction involves or may involve a franchise registration state then the franchisor must have obtained registration of its FDD with the particular state prior to offering or selling a franchise.
Find out about our Franchise Counsel Program and learn how we can assist your brand in successfully managing your FDD registrations and notice filings. To learn more about particular state franchise laws, visit our state specific franchise laws page.
To learn more about state-by-state franchise registration and filing information visit our interactive franchise registration map. To learn more about how we can assist with the filing and registering of your FDD Contact us at (800) 976-4904 or by email.
Are you a franchisor or a part of a franchise sales team? Do you want to learn more about franchise sale compliance and ensure that your sales practices comply with franchise laws and are consistent with best practices? Then this guide is for you. In this guide you’ll learn the... read more
In this guide you’ll learn the basics of franchising, how to franchise your business, and how to win at franchising. We’ll also take a deeper dive into legal requirements for franchising and why they matter, steps to take before and after you launch your franchise, and even some tips on... read more
When considering expanding a business both franchising and licensing are possible options. In this guide, you'll learn the differences of franchising and licensing and understand how each will affect you. read more
Are you considering franchising your business? If so, its important to understand the advantages and disadvantages of franchising your business. Franchising is a legal and business model designed to achieve multi-unit expansion. Compared to organic expansion where you invest in and open multiple locations yourself, franchising allows you to recruit... read more
The documents to franchise your business include the franchise disclosure document (FDD), franchise agreement, operations manual, financial statements, and state specific registration applications. Below we discuss each franchise document in detail. 1. Franchise Disclosure Document Before you can offer or sell a franchise you are required to issue and disclose... read more
Franchising may be the next big step for your business and represents an opportunity to grow your brand. So, how do you know if franchising is right for you? How do you know if your business is franchisable and, if it is, whether or not you should franchise your business?... read more
In this webinar, Charles Internicola and Laura Meyer, founder of Joybrand Creative, talk about how to position your brand to win at franchise sales. Some topics include: How franchisors can develop their brand strategy How to differentiate your brand strategy between your targeted end-user customers and prospective franchisees for franchise... read more
In this webinar, Charles N. Internicola, Esq. and Lisa Welko, CFE of Integrity Franchise Group discuss what it takes to make your brand attractive to franchise brokers and sell to qualified franchisees. Selling franchises and building a durable franchise system - all comes down to being a "good franchisor," making... read more
Key strategies to accelerate franchise growth for startup and emerging franchisors In this webinar, franchise attorney Charles Internicola and Nick Powills, founder of No Limit Agency and 1851 Franchise, discuss key strategies to accelerate franchise growth through PR and digital media. Some topics include: Steps franchisors should take when it... read more
With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.
Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.
An attorney client relationship is not established by submitting this initial contact information.