As a franchisee, it is important to have at least a basic understanding of the laws that protect you. With the recent growth of the franchise industry, more companies are turning to the franchise model for growth, and unfortunately more franchisees in new and established systems alike are finding themselves in situations where they need to take legal action to enforce their rights.
States With Franchise Relationship, Registration and Disclosure Laws
Currently, 21 states and the District of Columbia have franchise relationship or franchise registration and disclosure laws (or both). These laws serve different purposes, but the overarching concept is that they are designed to provide at least some measure of protection for franchisees.
It is widely understood that franchisors have the upper hand in franchise agreement negotiations and in the ongoing franchise relationship, and as a result state franchise laws provide franchisees with certain rights even if those rights are not explicitly stated in the franchise agreement.
Along with Washington D.C., the following states currently have franchise laws in place:
- Arkansas
- California
- Connecticut
- Delaware
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kentucky
- Maryland
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- New Jersey
- Tennessee
- Virginia
- Washington
- Wisconsin
What if Your State Does Not Have a Franchise Law?
If your state does not have a franchise law (or even if it does), there still may be other statutes or case law that protect you. For example, many states have industry-specific laws that franchisees and their franchise attorneys can use to their advantage. States also have general antitrust, anti-discrimination and unfair practices acts that will apply in many franchise-related contexts, and case law in some jurisdictions can be interpreted as providing franchisees with protections that limit franchisors’ ability to encroach on their territories even in the absence of clear language in the franchise agreement. Finally, there are federal laws (both franchise-specific and general) that can come into play as well.
In short, if you have a dispute with your franchisor, a state franchise law is by no means the only tool at your disposal. Between state franchise laws, other state and federal laws, case law, and the terms of your franchise agreement, there are a number of different places you can look for legal protection.
Whether you are dealing with an issue involving your territory, royalties or marketing fees, renewal rights, default and termination, or any other aspect of your franchised business or your relationship with your franchisor, it is worthwhile to speak with an attorney to get the full picture of your legal rights.
Goldstein Law Firm | Exclusively Representing Franchisees and Dealers Nationwide
Goldstein Law Firm is a national franchise law firm that exclusively represents franchisees and dealers. Franchise lawyer Jeff Goldstein has more than 30 years of experience reviewing Franchise Disclosure Documents (FDDs), negotiating franchise agreements and helping franchisees enforce their legal rights. To schedule a free consultation with Jeff Goldstein, call Goldstein Law Firm at (202) 293-3947 or send us a message online today.
