Denver Colorado Franchise Attorney Martin A. Mansfield, Jr.

    The following states have franchise laws requiring the franchisor to meet that state's requirements pertaining to offering franchises.  Each state has different requirements, but typically there is submission for registration of the franchisor's Franchise Disclosure Document 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 of some types of franchises but registration not required)
Arkansas (regulation but registration not required)
California
Delaware (regulation of a narrow range of "franchise distributors", 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
Tennessee (regulation, but registration not required)

Virginia

Washington
Wisconsin


The following states have “Business Opportunity” regulations that impact franchisors:

Alaska ^
California +
Connecticut*
Florida (annual franchise exemption filing required)
Georgia*
Illinois +
Indiana +
Iowa +
Kentucky (one-time franchise exemption filing required)
Louisiana ^
Maine*
Maryland +
Michigan +
Minnesota +
Nebraska (one time franchise exemption filing required)
New Hampshire ^ 
North Carolina*
Ohio ^
Oklahoma ^
South Carolina*
South Dakota +
Texas (one-time franchise exemption filing required)
Utah (annual franchise exemption filing required)
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 FDD when offering franchises.  In some states the exemption is automatic.  Other states require an annual or one-time short form filing with a moderate fee in order to obtain and keep the exemption.  In most cases, meeting these filing 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 (a state registered mark might suffice in South Carolina and Georgia) that identifies the franchise operations.  Compliance is onerous and involves posting a substantial bond.  Smaller franchisors without federal (or state) 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 automatically exempt franchisors in compliance with the FTC Rule.

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 FTC Rule is sufficient. Colorado is such a state. 

Most states have consumer protection laws that could impose liability for violating federal franchise regulations.