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What are Business Opportunity Laws?

Business opportunity laws are state laws that govern the offer and sale of a business opportunity where the purchaser of the “business opportunity” is typically provided with a proscribed marketing plan or strategy. Business opportunity laws are similar to state franchise laws in that they are designed to protect a buyer and investor by requiring the seller of the “business opportunity” to provide the buyer with a pre-sale disclosure.

The following states have enacted business opportunity laws: Alabama, Alaska, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Nebraska, New Hampshire, North Carolina, Ohio, South Carolina, South Dakota, Texas, Utah, Virginia and Washington.

In addition to the federal and state franchise laws, franchisor’s also need to be aware of state business opportunity laws. Under most, if not all, state business opportunity laws, what constitutes a “business opportunity” is broadly defined to include franchisor-franchisee relationships and so in states that do not require franchise registration, franchisors must also examine their compliance obligations under the state business opportunity laws. Many state business opportunity laws provide exemptions for franchisors where the franchisor satisfies the franchise laws, i.e., where the buyer of the business opportunity is provided with the franchisor’s franchise disclosure document.

To learn more about State Franchise Laws and to review our interactive map, click here.

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