Washington State is taking another step toward increased regulatory oversight of franchise brokers. On October 12, 2026, the Washington Department of Financial Institutions (DFI), Securities Division, filed a Preproposal Statement of Inquiry (CR-101), WSR 26-21-023, announcing that it is considering amendments to Chapter 460-82 of the Washington Administrative Code.

The contemplated amendments would define certain conduct constituting "dishonest or unethical practices in the franchise industry" under RCW 19.100.252.

Although Washington already regulates franchise brokers, the state's Franchise Investment Protection Act does not expressly define what constitutes dishonest or unethical practices for purposes of franchise broker registration and disciplinary proceedings.

Key Takeaway: Washington has not yet adopted new franchise broker conduct rules. However, the inquiry signals that regulators are considering more specific standards that could affect franchise brokers, consultants, and franchise sales organizations operating in Washington.

What Is Washington Proposing?

The Washington Securities Division is considering amendments to Chapter 460-82 WAC that would identify certain practices constituting dishonest or unethical conduct in the franchise industry.

The rulemaking stems from an existing provision of Washington's Franchise Investment Protection Act, RCW 19.100.252.

Under that statute, the director may deny, suspend, or revoke a franchise broker's registration when the director determines that such action is in the public interest and the broker, or certain associated individuals, has engaged in dishonest or unethical practices.

However, the statute does not expressly define the prohibited conduct.

The Securities Division explained that providing examples of dishonest or unethical practices would help brokers determine whether their activities could affect their eligibility for registration in Washington.

Important Distinction: The October 2026 filing is a preliminary inquiry, not a final regulation. Washington has not yet published the specific conduct standards it intends to propose.

Washington Already Regulates Franchise Brokers

Washington's existing franchise broker regulatory framework is found in Chapter 460-82 WAC and the state's Franchise Investment Protection Act.

The new inquiry should not be confused with the creation of a franchise broker registration system. Washington already has such a framework.

Instead, the contemplated amendments would clarify the existing statutory authority to deny, suspend, or revoke franchise broker registrations based on dishonest or unethical conduct.

This distinction matters because brokers may already have obligations under Washington law regardless of whether the proposed amendments are ultimately adopted.

Potential Implications for Franchise Brokers

The Securities Division has not yet identified specific categories of conduct that would be included in the proposed rules.

Nevertheless, several areas of existing franchise sales compliance deserve particular attention. These are potential compliance considerations, not conduct categories expressly proposed in Washington's CR-101.

1. Financial Performance Representations

Brokers should carefully evaluate statements concerning franchise profitability, projected revenue, expected returns, and financial performance. The FTC Franchise Rule imposes specific requirements governing financial performance representations, including disclosures in Item 19 of the FDD.

2. Broker Compensation and Conflicts

Commission-based referral arrangements can create potential conflicts of interest. Brokers should accurately describe their relationships with franchisors and avoid misleading prospective franchisees about the nature of their services or financial incentives.

3. Franchise Sales Representations

Statements concerning investment costs, territorial protections, operational support, training, and franchisee obligations should be accurate and consistent with applicable franchise disclosure requirements.

4. Registration Compliance

Brokers conducting activities involving Washington should evaluate applicable registration requirements and maintain appropriate compliance procedures before soliciting prospective franchisees.

Whether Washington ultimately incorporates any of these subjects into its new conduct standards will depend on the regulatory language published during the next stage of rulemaking.

What Should Franchisors Consider?

Although the inquiry focuses on franchise brokers, franchisors that rely on third-party sales organizations should also pay attention.

Many franchisors engage independent brokers, consultants, referral networks, or outsourced franchise development organizations to identify prospective franchisees.

These arrangements can introduce additional compliance considerations when third parties communicate with prospective buyers on the franchisor's behalf.

Recommended Franchisor Compliance Measures

Franchisors working with third-party franchise brokers should consider the following:

  • Written Broker Agreements: Clearly define authorized activities, compensation, and compliance responsibilities.
  • Approved Marketing Materials: Require brokers to use authorized franchise marketing and disclosure materials.
  • Item 19 Compliance: Establish clear procedures governing financial performance representations.
  • Registration Verification: Evaluate applicable state registration requirements before permitting franchise solicitation activities.
  • Training and Oversight: Provide guidance regarding permissible sales practices and required disclosures.
  • Recordkeeping: Maintain records of broker relationships, disclosures, and relevant sales activities.

These measures can help reduce existing franchise sales compliance risks and position franchisors to respond to additional regulatory requirements if adopted.

What Happens Next?

Washington's rulemaking process remains in its preliminary stages.

1

October 12, 2026: CR-101 Filed

The Securities Division filed its Preproposal Statement of Inquiry, WSR 26-21-023, announcing consideration of amendments to Chapter 460-82 WAC.

2

October 20, 2026: Notice Issued

The Securities Division issued a notice informing interested parties about the contemplated rulemaking and the opportunity to provide comments.

3

Next Step: Proposed Rule Language

The Securities Division anticipates circulating a Notice of Proposed Rule-Making (CR-102) accompanied by the text of the proposed amendments.

4

Public Comments and Further Rulemaking

The agency will consider public comments before determining whether and how to adopt new rules.

No specific new conduct standards have been adopted through this proceeding as of October 27, 2026.

How to Submit Comments on Washington's Proposed Rules

The Securities Division is soliciting comments from interested parties during the preliminary rulemaking process.

Comments may be directed to:

Washington Department of Financial Institutions

Contact: Amy E. Wood
Division: Securities Division
Address: P.O. Box 41200, Olympia, WA 98504-1200
Email: amy.wood@dfi.wa.gov

View the Official Washington Rulemaking Notice

The official CR-101 filing and subsequent rulemaking materials should be reviewed by brokers and franchisors interested in participating in the process.

Our Analysis: Greater Clarity Could Bring Greater Scrutiny

Washington's contemplated amendments could have meaningful implications for franchise brokers because the underlying statute already authorizes significant disciplinary consequences.

By identifying specific examples of dishonest or unethical conduct, the state could provide brokers with greater notice of prohibited activities while also establishing more explicit standards for regulatory enforcement.

The practical impact will depend on the scope of the proposed regulatory language.

For example, rules addressing misrepresentations, conflicts of interest, or sales practices could affect how franchise brokers communicate with prospective buyers and structure their relationships with franchisors.

At the same time, overly broad or ambiguous standards could create additional uncertainty for legitimate franchise sales professionals.

Industry participants may therefore benefit from reviewing the proposed language once published and participating in the public comment process.

Frequently Asked Questions

Has Washington adopted new franchise broker rules?

No. As of October 27, 2026, Washington has initiated a preliminary rulemaking inquiry but has not adopted new conduct standards through this proceeding.

Does Washington require franchise brokers to register?

Washington already maintains a franchise broker regulatory framework under its Franchise Investment Protection Act and Chapter 460-82 WAC. Whether registration is required depends on the broker's activities and applicable law.

What conduct could be considered dishonest or unethical?

The Securities Division has not yet published the specific conduct categories it intends to propose. The contemplated rulemaking seeks to clarify the existing statutory standard under RCW 19.100.252.

Will the new rules affect franchise consultants?

Potentially. Whether a particular consultant or intermediary is regulated as a franchise broker depends on the applicable statutory definitions and the activities performed. The impact of any new conduct rules will depend on their final language.

Can franchise brokers comment on the proposed rules?

Yes. Washington's Securities Division is soliciting comments from interested parties during the preliminary rulemaking process.

When will the new Washington rules take effect?

No effective date has been established for new conduct rules. The agency must first develop and publish proposed regulatory language and complete the applicable rulemaking process.

Need Guidance on Franchise Broker Compliance?

Waldrop & Colvin, PLLC advises franchisors, franchisees, and businesses involved in franchise development on franchise disclosure, registration, agreements, and regulatory compliance.

Whether you are evaluating state franchise broker requirements or developing compliance procedures for a franchise sales organization, our attorneys can help.

Schedule a Free 15-Minute Consultation

Or call (757) 551-0225

Disclaimer: This article is provided for general informational purposes and does not constitute legal advice. Washington's rulemaking remains preliminary as of October 27, 2026. The discussion of potential compliance concerns should not be interpreted as describing specific regulatory provisions proposed or adopted by Washington through this proceeding.