State Franchise Laws

In the franchise law area there are prolific potentially applicable laws, depending upon the particular relevant state and industry of the supplier, franchise, franchisee and franchisor.

First, there are some franchise relationship laws at the state level that are not mired to any specific industry; these laws, in part, govern general terminations and non-renewals of franchisees and dealers (“Franchise Relationship” statutes, laws or acts).

Second, there exist in some states franchise disclosure and registration laws that impose obligations on the franchisor to provide information and documents to a potential franchisee before that franchisee or dealer purchases the franchise or distributorship (“Franchise Disclosure” statutes, laws or acts). The best known requirement associated with Franchise Disclosure legislation is the franchisor’s obligation to provide a Franchise Disclosure Document (“FDD”) to a potential franchisee before a franchise or distribution agreement is signed.

Third, some states have enacted industry-specific legislation that governs various aspects of the relationship between dealers, manufacturers, franchisors and franchisees so long as they operate in the specified industry and have a requisite geographic connection to that state. The most well-known industries regulated by such statutes include petroleum, tractors, and automobiles.

Fourth, at the federal level, although there is no general national franchise relationship statute governing wrongful franchise terminations and non-renewals, Congress has enacted federal industry-specific legislation in the gasoline and automobile areas, for instance. Also, the federal government, through the Federal Trade Commission, has enacted trade regulation rules for sales of franchises and distributorships. The FTC Rule governing disclosures in sales of franchises around the country imposes an obligation on franchisors and suppliers to provide an FDD meeting the FTC’s specifications.

Fifth, there is a group of tangentially-related state statutes that might be characterized as “unfair acts and practices” legislation. These very general and broad-sweeping statutes many times are consumer-based only, but there are a few that are applicable to unreasonable franchisor conduct.

Each of these franchise statutes is different in many ways than almost every other. Even those statutes that address one particular category of law, such as wrongful franchise terminations, differ greatly from other similar statutes across states and jurisdictions. Accordingly, it is impossible, without consulting a franchise lawyer, to easily ascertain with any degree of certainty the specific rights of a franchisee or dealer in a dispute with its franchisor or supplier. In this regard, the same exact franchise termination that is lawful in one state might be unlawful in another state. Moreover, some states allow a private franchisee injured by unlawful franchisor or supplier conduct to sue in court, while other states do not allow such private suits.

Based upon over thirty years’ experience in representing only franchisees and dealers, Jeff Goldstein has chosen to use this section of the firm’s Website to provide the firm’s clients and other franchisees and dealers with more explanatory, non-case specific, information regarding the first category of franchise laws – Franchise Relationship Laws, which, again, govern wrongful dealer and franchise terminations and non-renewals in general. In addition, this section of the website dealing with state franchise laws will, for each state, also identify briefly any other types of state-enacted legislation that exist in the franchise industry.

So, for each state you will be able to read about the following: (1) which prototypical dealer or franchise state laws the state has or does not have; (2) for those franchise laws that the state has, the names of the statutes and legal citations; (3) a summary of the state’s Franchise Relationship Statute (e.g., wrongful termination, wrongful non-renewal, wrongful refusal to consent to transfer or sale); and (4) excerpts of legal court cases from federal and state courts ruling upon wrongful franchise termination and wrongful non-renewal disputes.

We will be adding new individual states to the list on the Website in short order. In the event your state is not yet listed, please don’t hesitate to call Jeff Goldstein at 202-293-3947 or send him an email at jgoldstein@goldlawgroup.com for additional information, as Jeff Goldstein and the Goldstein Law Firm practice franchise law on behalf of franchisees and dealers nationally and internationally.

Click below to see your states Franchise Laws