Franchise Laws by State
Registration, Filing, and Renewal Requirements for Franchisors
Franchising in the United States is regulated at both the federal and state level. At the federal level, the Federal Trade Commission governs franchise sales through the FTC Franchise Rule, which requires franchisors to provide prospective franchisees with a Franchise Disclosure Document before any franchise agreement is signed or payment is accepted. The purpose of these disclosures is to ensure that potential franchisees receive important information about the franchise system, its history, financial structure, and the obligations involved in operating the business.
In addition to federal law, many states impose their own regulations that affect how franchises may be offered and sold within their borders. Some states require franchisors to register their Franchise Disclosure Document with a state regulator before offering franchises. Others require notice filings, exemption filings, or compliance with business opportunity statutes. A number of states do not require any additional filings beyond compliance with federal law.
Because these requirements vary significantly from state to state, franchisors expanding into new markets must carefully evaluate the legal requirements in each jurisdiction before offering franchises. The overview below explains how franchise laws differ across the United States and provides a state by state guide to registration, filing, and compliance requirements.
Need Help Registering a Franchise?
If you are preparing to franchise your business or need help managing multi state franchise registrations and renewals, schedule a free 15 minute consultation with a franchise attorney.
Federal Franchise Law and the FTC Franchise Rule
All franchise sales in the United States are governed by the Federal Trade Commission Franchise Rule. The rule requires franchisors to provide prospective franchisees with a Franchise Disclosure Document containing detailed information about the franchise system, business history, financial performance, and contractual obligations.
The disclosure must be delivered to the prospective franchisee at least fourteen days before any agreement is signed or payment is accepted.
The FTC Franchise Rule applies nationwide. However, many states impose additional regulations that franchisors must comply with before offering or selling franchises within their borders.
These state laws fall into three general categories:
• Franchise registration states
• Franchise filing or exemption states
• Non registration states
Each category carries different compliance obligations for franchisors.
Franchise Registration States
Franchise registration states generally require franchisors to submit their Franchise Disclosure Document for review and registration before offering or selling franchises in that state.
In many cases, regulators issue comment letters requiring revisions before issuing a permit.
Registration must typically be renewed annually, and material changes to the FDD may require amendments or additional filings.
Because regulators review the FDD in these states, the registration process often takes 30 to 120 days depending on the jurisdiction.
Annual Filing States
Some states do not require full franchise registration but do require franchisors to file certain documents or obtain a permit on an annual basis.
Unlike registration states, these jurisdictions usually do not review the contents of the FDD. Instead, the filing serves primarily as a notification to the state that the franchisor intends to offer franchises there.
Processing times in filing states are usually shorter, and in some cases permission is automatic once the filing is submitted.
One-time Filing and Exemption States
In one-time filing states, a franchisor can offer and sell franchises in perpetuity (subject to changes in state law) with a valid FDD after they file a one-time notice or exemption filing.
Business Opportunity States
In business opportunity states, franchisors must register as a business opportunity unless they have a federally registered trademark or another exemption applies.
Non-registration States
The majority of states do not require franchise registration or filing.
In these states, franchisors must still comply with the FTC Franchise Rule and provide the required FDD disclosures to prospective franchisees, but there is no state level approval process.
Although these states do not regulate franchise registration, some impose franchise relationship laws governing termination, renewal, and transfers.
Franchise Laws by State Directory
Each state regulates franchising differently. Some require formal registration and review of the franchise disclosure document, while others only require notice filings or impose no franchise specific requirements.
The following directory explains the laws and regulatory procedures applicable in each state.
What states do not require franchise registration?
The "non-registration states"
- Alabama
- Alaska
- Arizona
- Arkansas
- Colorado
- Delaware
- District of Columbia
- Idaho
- Iowa
- Kansas
- Massachusetts
- Mississippi
- Missouri
- Montana
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Tennessee
- Vermont
- West Virginia
- Wyoming
What states have business opportunity laws?
The "business opportunity states"
- Connecticut*
- Georgia
- Louisiana
- Maine
- North Carolina
- South Carolina
What states have one-time filing requirements
The "one-time filing states"
- Connecticut*
- Kentucky
- Nebraska
- Texas
Franchise Registration States and Filing Fees by State
Franchise laws vary significantly across the United States. Some states require franchisors to register their Franchise Disclosure Document before offering or selling franchises, while others require only notice filings, annual filings, or exemption filings. The following table identifies the primary franchise registration states and filing states, along with the current government filing fees.
| State | Filing Type | Initial Franchise Registration or Filing Fee |
|---|---|---|
| California | Registration | $1,865 |
| Hawaii | Registration | $250 |
| Illinois | Registration | $500 |
| Indiana | Registration | $500 |
| Maryland | Registration | $500 |
| Michigan | Registration | $250 |
| Minnesota | Registration | $400 |
| New York | Registration | $750 |
| North Dakota | Registration | $250 |
| Rhode Island | Registration | $600 |
| South Dakota | Registration | $250 |
| Virginia | Registration | $500 |
| Washington | Registration | $600 |
| Wisconsin | Registration | $400 |
| Texas | Exemption Filing | $25 |
| Florida | Annual Filing | $100 |
| Utah | Annual Filing | $100 |
| Kentucky | Exemption Filing | $150 |
| Nebraska | Exemption Filing | $100 |
| Connecticut | Notice Filing | $100 |
The states listed above represent the primary jurisdictions where franchisors must complete a registration filing, annual notice filing, or exemption notice before offering franchises. Because state regulators periodically adjust filing fees and procedures, franchisors should verify current requirements before submitting any franchise registration or notice filing.
Additional Franchise Costs to Consider
Most franchise registration and renewal filings are now submitted electronically. Many state regulators participate in a centralized system called FRED, which stands for the Franchise Electronic Depository operated by NASAA.
When filings are submitted through the FRED system, a system processing fee applies in addition to the state filing fee. Currently, the system charges $100 for new franchise registration filings and $50 for renewal filings.
Some states maintain their own electronic filing portals instead of using FRED. In those jurisdictions, the FRED system fee does not apply. Regardless of the platform used, electronic filing has significantly streamlined the franchise registration process and allows regulators to review submissions more efficiently.
Attorney Fees
Most franchisors work with their franchise counsel on an ongoing advisory basis rather than hiring a lawyer for isolated projects. This is because franchise systems require continuous legal oversight to remain compliant with federal and state franchise laws.
Typical responsibilities include maintaining the Franchise Disclosure Document, managing annual state renewals, preparing state filings, and reviewing franchise agreements with new franchisees.
For emerging franchise systems, many law firms offer subscription or fixed monthly support arrangements. In the market today, ongoing legal support for early stage franchisors often ranges between $1,500 and $3,500 per month, depending on the size of the system, number of registrations, and the level of support required. As a franchise system grows, legal costs typically increase as additional regulatory filings, negotiations, and operational matters arise.
Auditor Fees
Franchise regulations require franchisors to include audited financial statements in their Franchise Disclosure Document. These audited financial statements must be updated annually and included in each FDD issued to prospective franchisees.
Federal law permits a limited phase in of the audit requirement for new franchisors, but most franchise registration states do not recognize that exemption. As a result, many franchisors must obtain an audit before they begin offering franchises and again each year thereafter.
The cost of a franchise audit can vary widely depending on the entity structure, number of transactions, complexity of the business, and accounting systems in place. Because the audited financial statements form a required portion of the FDD, working with a CPA familiar with franchise disclosure requirements is essential.
An initial audit for a new franchisor entity will often range from $1,500 to $8,500, dependent on the audit firm and scope of services.
How Franchise Registration Works
Although each state has its own procedures, the registration process generally follows several common steps.
Preparing the Franchise Disclosure Document
The first step in the process is preparing the Franchise Disclosure Document in compliance with the FTC Franchise Rule. The FDD contains 23 disclosure items describing the franchisor, the franchise opportunity, and the legal and financial structure of the system.
State Registration Filing
In registration states, the franchisor must submit the FDD and supporting documents to the state regulator along with a registration application and filing fee.
Regulatory Review
State examiners review the filing to ensure compliance with disclosure laws. If issues are identified, the regulator will issue a comment letter requiring corrections.
Registration
Once the application is reviewed and all comments have been addressed, the franchisor receives authorization to offer and sell franchises within that state.
Renewal
Franchise registrations are not permanent. Most registration states require annual renewal of the franchisor’s registration. Updates are also required promptly after any material change.
Common Compliance Mistakes Franchisors Make
Expanding a franchise system across multiple states creates significant legal and regulatory obligations. While the Franchise Disclosure Document provides a standardized framework for disclosure, compliance failures often occur when franchisors underestimate how state specific regulations operate in practice. The most common mistakes tend to arise during expansion into new states, annual updates of the FDD, and the administration of franchise sales activity.
Below are several compliance issues that frequently create problems for franchisors.
Selling Franchises Before State Registration
One of the most serious mistakes occurs when franchisors begin marketing or offering franchises in a registration state before the state regulator has issued a permit.
In states such as California, New York, Illinois, and Virginia, the franchisor must obtain registration permission before offering or selling franchises. This restriction applies not only to signing franchise agreements but also to many forms of advertising and solicitation.
For example, publishing marketing materials, attending franchise expos, or advertising franchise opportunities directed toward residents of a registration state may be considered an offer to sell a franchise. If registration has not yet been permitted, these activities can create regulatory violations and delay the registration process.
Franchisors should ensure that all marketing and sales teams understand which states are permitted and which are still pending registration.
Missing Annual Registration Renewal Deadlines
Most franchise registration states require annual renewal of the franchisor’s registration. These renewals typically correspond to the franchisor’s fiscal year end and require submission of an updated FDD and supporting documents.
Missing a renewal deadline can have immediate consequences. If a registration lapses, the franchisor may be prohibited from offering or selling franchises in that state until the renewal is filed and permitted. In active franchise systems, this can disrupt franchise sales pipelines and delay expansion plans.
Maintaining a reliable compliance calendar that tracks renewal deadlines across all registration states is essential for franchisors operating in multiple jurisdictions.
Failing to Update the FDD for Material Changes
Franchise laws require franchisors to update their disclosure documents whenever material changes occur. These updates are not limited to the annual FDD update cycle.
Material changes can include developments such as significant litigation, changes in ownership, new franchise fees, modifications to franchise agreements, or financial performance changes. When these events occur, franchisors may be required to amend their FDD and, in registration states, submit amendments to the state regulator.
Failing to update the FDD after a material change can create disclosure violations and potential claims from franchisees who relied on outdated information.
Using the Wrong Version of the FDD
Another frequent issue occurs when franchisors inadvertently distribute different versions of the FDD to different prospective franchisees.
For example, if a franchisor updates its FDD after the annual update or following a state regulator comment letter, earlier versions of the document may still circulate through sales teams, brokers, or franchise portals. Providing inconsistent disclosure documents can create confusion and regulatory risk.
Franchisors should maintain strict internal controls to ensure that only the current registered FDD is used in all franchise sales activity.
Improper Financial Statement Disclosures
Financial statements are one of the most heavily scrutinized sections of the FDD. Registration states typically require audited financial statements prepared in accordance with applicable accounting standards.
Some franchisors mistakenly attempt to use unaudited or internally prepared financial statements when filing in registration states. Others fail to update financial statements within the required time period following the end of the fiscal year.
Because regulators often focus closely on financial disclosures, deficiencies in this area can significantly delay franchise registration approvals.
Misunderstanding Business Opportunity Laws
Several states regulate franchise sales through business opportunity statutes rather than traditional franchise registration laws. These laws may require filings, exemptions, or specific contractual disclosures even when the franchise qualifies for federal franchise law treatment.
Franchisors who assume that non registration states have no compliance requirements may inadvertently overlook these obligations. As a result, they may fail to file required exemptions or provide mandated disclosures.
Understanding how each state treats franchise offerings under its business opportunity laws is an important part of multi state compliance.
Inadequate Oversight of Franchise Sales Practices
Franchise compliance is not limited to regulatory filings. The way a franchise opportunity is marketed and sold can also create legal risk.
Statements made by franchise sales staff, consultants, or brokers about expected financial performance must be consistent with the disclosures contained in the FDD. Providing earnings projections or performance claims outside of the permitted disclosures can create violations of franchise disclosure laws.
Franchisors should ensure that their sales teams receive proper training and understand the limitations on financial performance representations.
Poor Coordination Between Legal, Sales, and Compliance Teams
As franchise systems grow, compliance responsibilities often become spread across multiple departments. Legal teams manage FDD preparation, compliance teams handle state filings, and sales teams interact with prospective franchisees.
When these groups operate without clear coordination, mistakes can occur such as distributing outdated documents, marketing in unregistered states, or missing renewal deadlines.
Establishing clear internal processes and communication between departments helps ensure that franchise compliance obligations are consistently met as the system expands.
Navigating Franchise Registration and Compliance
Navigating franchise laws and tracking state approval timelines can seem daunting for many business executives. The key to managing these regulatory requirements is working with experienced franchise counsel who understands the nuances of federal and state franchise compliance.
In addition to legal guidance, there are practical tools that can help franchisors stay organized throughout the registration and renewal process (we founded the Zors AI – the franchise intelligence and territory mapping platform) . At Waldrop & Colvin, we provide clients with a dedicated franchise tracking board that monitors state by state registration approvals, renewal deadlines, and regulatory notes. For clients who prefer a visual overview, we also prepare franchise registration maps that illustrate where a franchise system is approved to operate.
We also work closely with franchise development and sales teams to ensure they understand disclosure requirements and timing rules. Proper coordination between legal counsel and the sales team helps prevent compliance issues that can arise during franchise offering and disclosure.
You can learn more about specific state requirements by following the links in the directory above. We regularly update our website with new resources, including guides explaining the different franchise models and the basic legal requirements for starting a franchise system.
If you have questions about franchise registration, renewals, or multi state compliance, we invite you to schedule a free 15 minute consultation with a franchise attorney. We would be happy to discuss your plans and help guide your franchise system through the registration process.
Schedule a Free Video Consultation Today!
Schedule a time to speak directly with one of our franchise attorneys. During this brief video consultation, we can answer your questions about franchise registration, state filing requirements, and the legal steps involved in starting or expanding a franchise system. Choose a convenient time below to get started.
