Denver Colorado Franchise Attorney Martin A. Mansfield, Jr.
Martin A. Mansfield, Jr., Attorney at Law
7900 East Union Avenue
Suite 1100
Denver, CO 80237
ph: 303-740-2231
martin
State Regulation
STATES WITH FRANCHISE AND BUSINESS OPPORTUNITY LAWS
The following states, as well as Washington, D.C., have franchise laws requiring the franchisor to use the Uniform Franchise Disclosure Document and also meet that state's requirements pertaining to offering franchises. Each state has different requirements, but typically there is registration of the franchisor's UFDD and an approval-disapproval process whereby the state agency either grants or withholds permission to offer franchises in that state. These states impose differing obligations and legal liabilities on franchisors and sometimes personal liability on those running the franchise operations. These states have differing laws regulating or voiding some franchise agreement clauses, such as termination and covenant not to compete provisions. These states also regulate those who sell franchises for others, including salespersons and franchise brokers. Also, the meaning of a franchise "offer" varies from state to state and sometimes franchise offers made outside a given state are deemed to apply to that state if there is some contact between that state and the franchisee or the operation of the franchise. To be safe, avoid even an incidental contact with a state listed below without first contacting me to comply with that state's legal requirements.
The franchise regulation states are:
Alabama (regulation but registration not required)
Arkansas (regulation but registration not required)
California
Delaware (regulation, but registration not required)
Illinois
Iowa (regulation, but registration not required)
Indiana
Hawaii
Maryland
Michigan (simplified notice registration)
Minnesota
Mississippi (regulation, but registration not required)
Missouri (regulation, but registration not required)
New Jersey (regulation, but registration not required)
New York
North Dakota
Oregon (regulation, but registration not required)
Rhode Island
South Dakota
Virginia
Washington
Wisconsin
The following states have “Business Opportunity” regulations that impact franchisors:
Alaska
California +
Connecticut*
Florida
Georgia*
Illinois +
Indiana +
Iowa +
Kentucky
Louisiana
Maine*
Maryland +
Michigan +
Minnesota +
Nebraska
New Hampshire
North Carolina*
Ohio -
Oklahoma ^ (Franchisor can be exempt by providing prospect a proper UFOC 10 business days before signature or payment.)
South Carolina*
South Dakota +
Texas
Utah
Virginia +
Washington +
Wisconsin +
Most of the business opportunity states that are not also franchise regulation states provide an exemption for franchises complying with the FTC franchise disclosure laws and using the UFDD when offering franchises, but do impose some sort of requirement (typically a short form filing with a moderate fee) in order to obtain and keep the exemption. In most cases, meeting these requirements is relatively easy and inexpensive, but compliance must be completed before any contact is made with prospective franchisees in those states.
* These states do not exempt a franchisor from complying with their business opportunity laws unless the franchisor already has a federally registered trademark that identifies the franchise operations. Compliance is onerous and involves posting a substantial bond. Smaller franchisors without federally registered trademarks should therefore avoid contact with these states. A pending trademark application does not count as a registered mark until registration is granted.
+ These states are also franchise regulation states. Typically a franchisor will have to comply only with the franchise regulation, not the business opportunity regulation.
- These states have no filing requirement but do have regulations.
^ These states require filing unless exempt.
States not found in either of the above lists have no statutes or regulations directly regulating franchises or business opportunities, meaning that compliance with the federal regulations is sufficient. Most states do have consumer protection laws that could impose liability for violating federal franchise regulations even if those states lack franchise or business opportunity laws.
Martin A. Mansfield, Jr., Attorney at Law
7900 East Union Avenue
Suite 1100
Denver, CO 80237
ph: 303-740-2231
martin
