Franchising 2026 Comparisons

Franchising has been a thriving part of the US economy for decades. In 2026, the franchise sector accounts for nearly 3% of total US GDP (according to the International Franchise Association); total franchise GDP in the United States in 2025 was estimated at USD549.9 billion, and in 2026 is estimated to increase by about 2.2%. 

The top fastest-growing states for franchising in 2026 are Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio and Maryland. Child services and commercial and residential services are expected to be the fastest-growing franchise types in 2026.

Other growth areas in business format franchising include quick service restaurants, lodging, health and wellness, automotive, business services, real estate, retail food, and personal services (such as moving and storage, pet-related goods and services, and much more).

Examples of key brands active in the market include 7-Eleven, Inc, Yum! Brands (primarily Taco Bell, Pizza Hut and KFC), Jersey Mike’s Subs, Dunkin’ Donuts, McDonald’s, Wingstop, Planet Fitness, Subway restaurants, Ace Hardware, the UPS Store, and Intercontinental Hotel Group, among many others.

Franchising is regulated at both the federal and state level. At the federal level (which applies throughout the United States, its territories and possessions), the Federal Trade Commission’s (FTC) Franchise Rule, as amended (the “FTC Franchise Rule”), requires franchisors to provide prospective franchisees with specified pre-sale disclosures in the prescribed format of a Franchise Disclosure Document (FDD). The FTC Franchise Rule generally requires the franchisor to furnish the FDD to prospective franchisees at least 14 calendar days before the prospective franchisee signs a franchise agreement or the franchisor collects any payment for the franchise. 

Additionally, at the state level, 14 states (commonly referred to as “Registration States”) have their own franchise registration and disclosure laws, which are similar in nature and overlap with – but also differ in certain ways from – each other and from the FTC Franchise Rule. The key difference from the FTC Franchise Rule is that, beyond requiring pre-sale disclosure, the state laws require pre-sale registration of the franchise offering with the state’s franchise administrator before offering or selling franchises in the state. The registration process and the extent of regulatory review vary considerably from state to state, ranging from relatively straightforward filings to more substantive review and acceptance requirements.

In the event of litigation regarding the accuracy or completeness of pre-sale required disclosures by the franchisor, various states have statutes prohibiting fraudulent and deceptive trade practices, which are sometimes referred to as “Little FTC Acts”. These state laws can play a role in franchise litigation because, in certain circumstances, a franchisor can be sued regarding its violation of the federal FTC Franchise Rule (which has no private right of action) under the auspices of a state’s “Little FTC Act” which incorporates violations of the federal rule into its scope.

Besides franchise registration and disclosure laws, over 20 states and territories have franchise relationship statutes which regulate aspects of the ongoing franchise relationship between a franchisor and a franchisee, such as under what circumstances a franchisor may terminate a franchise agreement, refuse to renew a franchise agreement, and restrict transfers, among other subjects.

Finally, 26 states have business opportunity laws, which are broader in scope than franchises but, under certain circumstances, apply to franchises. Business opportunity laws require pre-sale disclosure to the prospective franchisee with a disclosure document similar in nature to an FDD, and in certain states either a registration filing or an exemption filing in order for a franchisor to be permitted to offer or sell franchises in that state (depending on the specifics of the business opportunity law and whether an exemption applies – which often depends, in turn, on whether the franchisor has a federally registered trade mark for its brand or not).

One must consider both the US federal law definition of franchising (applicable to franchising anywhere in the United States, its territories and possessions), and the definition of franchising under the law of each state that has a franchise statute (applicable in certain instances where particular states have adopted their own franchise registration or disclosure laws). In large part these definitions overlap, but there are nuances from state to state that can sometimes make an important difference.

The FTC Franchise Rule (16 CFR Parts 436 and 437) is the federal law defining franchising. The following is the exact language from the FTC Franchise Rule defining a franchise, in Section 436.1(h).

• Franchise means any continuing commercial relationship or arrangement, whatever it may be called, in which the terms of the offer or contract specify, or the franchise seller promises or represents, orally or in writing, that:
1. the franchisee will obtain the right to operate a business that is identified or associated with the franchisor’s trademark, or to offer, sell, or distribute goods, services, or commodities that are identified or associated with the franchisor’s trademark;
2. the franchisor will exert or has authority to exert a significant degree of control over the franchisee’s method of operation, or provide significant assistance in the franchisee’s method of operation; and
3. as a condition of obtaining or commencing operation of the franchise, the franchisee makes a required payment or commits to make a required payment to the franchisor or its affiliate.

Note that the FTC Franchise Rule does not entirely pre-empt individual state franchise registration/disclosure statutes. Instead, with a few notable exceptions, the FTC Franchise Rule generally governs side-by-side with the franchise registration/disclosure laws of the 14 Franchise Registration States. Accordingly, a franchisor must consider both the federal and applicable state requirements when offering or selling a franchise in a Franchise Registration State. The analysis is particularly important because each state may have its own definition of a franchise and its own rules of when a franchise is considered to be sold “in” that state – a concept that some states define in a very broad manner that can capture transactions involving parties or activities outside the state. Most notably, New York is one of those states with a different and broader definition, in the New York State Franchise Sales Act, which states the following.

• “Franchise” means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:
1. a franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor, and the franchisee is required to pay, directly or indirectly, a franchise fee; or
2. a franchisee is granted the right to engage in the business of offering, selling, or  distributing goods or services substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate, and the franchisee is required to pay, directly or indirectly, a franchise fee.

Note that it does not matter whether the arrangement is called a licence agreement or anything else; if the elements of the franchise definition (trade mark licence, marketing plan/control/assistance, and payment of a fee for the franchise) (and note that in New York, only two elements are needed) are met, then the contracts, and the party granting the franchise, are subject to franchise law requirements.

In the United States, franchisors are generally required under federal law – and in many jurisdictions under applicable state law – to prepare a comprehensive pre-sale FDD (discussed in 1.2 Franchise Regulation) and furnish it to each prospective franchisee prior to offering or selling a franchise.

At the federal level, franchise sales are regulated by the FTC through the FTC Franchise Rule, codified at 16 CFR Part 436. The Rule establishes uniform nationwide pre-sale disclosure requirements to ensure that prospective franchisees receive material information about the franchise offering sufficiently in advance of the sale to make an informed investment decision. It requires that franchisors furnish their FDDs to prospective franchisees at least 14 calendar days before the prospective franchisee signs a binding agreement with, or pays consideration to, the franchisor or one of its affiliates. The 14-day disclosure period commences the day after the FDD is furnished. If the franchisor unilaterally and materially modifies the form of franchise agreement in the FDD, it must provide the revised agreement at least seven calendar days before the agreement is executed. 

The 23 required disclosure items in an FDD are the following (with various sub-items under each “Item” heading as detailed in the FTC Franchise Rule):

• the franchisor, and any parents, predecessors and affiliates;
• business experience;
• litigation;
• bankruptcy;
• initial fees;
• other fees;
• estimated initial investment;
• restrictions on sources of products and services;
• the franchisee’s obligations;
• financing;
• the franchisor’s assistance, advertising, computer systems and training;
• territory;
• trade marks;
• patents, copyrights and proprietary information;
• the obligation to participate in the actual operation of the franchise business;
• restrictions on what the franchisee may sell;
• renewal, termination, transfer and dispute resolution;
• public figures;
• financial performance representations;
• outlets and franchisee information;
• financial statements;
• contracts; and
• receipts.

The FTC Franchise Rule, however, does not require pre-sale disclosure for every franchise transaction. In fact, the Rule expressly exempts certain categories of franchise transactions, including fractional franchises, large investment franchises, sales to franchisor insiders, leased department arrangements, oral agreements, and certain franchise renewals or extensions. Whether an exemption under the Rule applies depends on the specific facts and circumstances of the franchise transaction.

While the FTC Franchise Rule establishes a federal pre-sale disclosure requirement, many states supplement those requirements in their own respective franchise laws. Each state franchise law varies by jurisdiction. However, these laws generally fall within one of the following three categories:

• franchise registration and disclosure laws;
• non-registration franchise disclosure laws; and
• business opportunity laws. 

Currently, the 14 Registration States – California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin – have enacted franchise registration and disclosure laws. Generally, these laws require that franchisors prepare an FTC-compliant FDD and register or file it with the appropriate state regulatory agency and (in certain cases) obtain the state’s approval before the franchisor can offer or sell a franchise in that state. Although commonly grouped with the Registration States, Michigan only requires franchisors to file a notice of intent with the appropriate regulatory agency to offer and sell franchises in Michigan. Once the required registration, filing or notice has been submitted (and, where necessary, approved), the franchisor must comply with the FTC Franchise Rule’s 14-day disclosure requirement before offering or selling a franchise.

Oregon is not generally classified as a Franchise Registration State, but it imposes franchise disclosure requirements that closely align with those imposed by the Rule and Registration States. Unlike the Registration States, Oregon does not require franchisors to file, register or obtain regulatory approval of their FDD before offering or selling franchises. 

The remaining 35 other states, commonly referred to as “Non-Registration States”, generally do not require that franchisors register or file their FDDs, unless a business opportunity law applies (see the next paragraph). Instead, franchisors offering and selling franchises in Non-Registration States must comply with the FTC Franchise Rule’s pre-sale disclosure requirements. Several Non-Registration States enforce these disclosure obligations through their own general consumer protection statutes, commonly referred to as “Little FTC Acts”, discussed in 1.2 Franchise Regulation. These statutes generally prohibit unfair or deceptive acts or practices and, in many jurisdictions, expressly incorporate the Rule or treat a franchisor’s failure to comply with the Rule as a state law violation.

Finally, 26 states have enacted business opportunity laws that may regulate the sale of franchises. Although most exempt franchises, the exemption generally applies only if the offering satisfies the state’s statutory definition of a “franchise” and, in some states, only if the franchisor has a federally registered trade mark. Offerings that do not qualify for an exemption may be subject to state business disclosure and registration requirements, which are generally less extensive than those imposed by the FTC Franchise Rule. Consequently, where the Rule applies, its disclosure requirements generally pre-empt inconsistent state business opportunity disclosure provisions.

The Rule requires the FDD to be written in “plain English” and presented in a clear and understandable manner.

Failure to comply with applicable federal or state pre-sale disclosure requirements may expose the franchisor and responsible individuals – including officers, directors, employees, franchise sellers and other individuals who participate in or are responsible for the non-compliant conduct – to significant legal, financial and regulatory liability. The nature and scope of the available remedies may vary depending on the applicable federal and state franchise laws.

At the federal level, Section 436.2 of the FTC Franchise Rule expressly provides that violations of the Rule’s disclosure obligations constitutes an “unfair or deceptive act or practice” under Section 5 of the Federal Trade Commission Act (the “FTC Act”), 15 US Code Section 45, giving the FTC broad investigative and enforcement authority to pursue any violations of the Rule. Among other powers, the FTC (pursuant to Sections 6, 9, 19 and 20 of the FTC Act) has authority to:

• conduct investigations;
• issue civil investigative demands and subpoenas;
• compel the production of documents and testimony; and
• commence administrative or judicial enforcement proceedings against franchisors and, where appropriate, any responsible individuals.

If the FTC has reason to believe that a franchisor violated the Rule, it may pursue a broad range of statutory and equitable remedies under Sections 5, 13, 18 and 19 of the FTC Act. Depending on the circumstances, these remedies may include:

• civil penalties;
• payment of restitution to the franchisee;
• rescission of the franchise agreement;
• preliminary or permanent injunctive relief; and
• other appropriate equitable remedies.

In appropriate cases, the FTC may also seek orders requiring changes to a franchisor’s business practices or prohibiting the franchisor from offering or selling franchises in the United States.

Although the Rule provides the FTC with significant enforcement authority, it does not create a private right of action. So, franchisees generally cannot directly sue a franchisor for disclosure violations. While legislation has been introduced in Congress to create such a private right of action, including the Franchisee Freedom Act (HR 10311), none has been enacted as of this writing.

Franchisors that fail to comply with their pre-sale disclosure obligations may also face liability under state laws. As discussed in 1.2 Franchise Regulation, several states have franchise disclosure and registration statutes that impose pre-sale disclosure requirements similar to those contained in the Rule, while others enforce those obligations through their consumer protection statutes, commonly referred to as “Little FTC Acts”.

States with franchise laws generally grant state regulators broad investigative and enforcement authority to enforce compliance with these laws. Although the scope of that authority varies by jurisdiction, regulators are typically empowered to:

• investigate suspected violations;
• compel document production and witness testimony;
• issue deficiency notices;
• require corrective FDD amendments; and
• initiate administrative proceedings.

Where a violation has been found, regulators may:

• deny, suspend or revoke a franchisor’s registration;
• issue stop orders or cease-and-desist orders;
• impose civil penalties; and
• seek temporary and permanent injunctive relief, restitution, rescission and other equitable relief.

Certain of the registration states also permit criminal penalties if it is determined that the franchisor’s conduct was wilful or fraudulent.

In addition to governmental enforcement, many state franchise laws grant franchisees a private right of action against franchisors, and in some jurisdictions against any officer, director, employee, franchise seller or other individual who materially participates in or is responsible for the violation. Depending on the applicable statute, franchisees may seek damages, rescission, attorneys’ fees, costs and other legal or equitable relief. For example, under California law, a franchisee may recover damages resulting from a franchisor’s violation of the state’s pre-sale disclosure requirements and, if the violation was wilful, may also seek rescission of the franchise. Similarly, New York law provides franchisees with a private right of action to recover damages for violations of its pre-sale disclosure requirements; where the violation is wilful and material, a New York franchisee may also seek rescission, together with 6% annual interest from the date of purchase, reasonable attorneys’ fees, and court costs.

The FTC Franchise Rule provides several exemptions from its pre-sale disclosure requirements under 16 CFR Section 436.8. These exemptions fall into two broad categories and reflect the FTC’s determination that certain franchise transactions either do not warrant the protections available under the Rule or involve prospective franchisees who possess sufficient business experience, financial sophistication, bargaining power or prior knowledge of the franchise to protect their own interests. These exemptions apply to transactions involving minimum payments, fractional franchises, leased departments, oral contracts, large investments, large franchisees, certain franchisor insiders, and petroleum marketers and resellers.

Many state franchise laws exempt certain franchise transactions from their registration and/or pre-sale disclosure requirements. While these exemptions vary by jurisdiction, they generally apply to transactions involving sophisticated, insider or institutional investors, large franchise investments, franchise renewals or extensions, existing franchisee transfers, fractional franchises, and isolated franchise sales. Unlike the Rule, some Registration States require that a franchisor file an application or notice of exemption (and in some cases, obtain the state regulator’s acceptance of such filing) before offering or selling a franchise in reliance on that exemption.

Because federal and state exemptions differ significantly in scope and application, franchisors must evaluate the laws of each state in which they intend to offer and sell franchises. Franchisors should not assume that an exemption available under the Rule is automatically available under state law, or vice versa, and should determine whether any notices, filings, applications or other procedural requirements must be satisfied, both under federal law and any applicable state law, before relying on an exemption.

English language is required. Neither the FTC Franchise Rule nor US state franchise disclosure and registration laws require franchisors to translate their FDDs into a foreign language. To the contrary, federal and state franchise laws only require FDDs to be prepared in “plain English” and presented in a clear, concise and understandable manner. While franchisors may choose to provide translated versions of their FDDs for business, operational or practical reasons, they are not statutorily required to do so. Accordingly, an FDD written in plain English is sufficient to comply with the Rule and applicable US state franchise disclosure and registration laws.

There are franchise registration laws in 14 states in the USA, as discussed in 1.2 Franchise Regulation and 2.1 Mandatory Disclosure – namely California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin.

Otherwise, for franchise offers or sales in the rest of the states, only federal franchise law (the FTC Franchise Rule) applies, which does not require any registration or other filing of a franchisor’s FDD with any government agency.

If a franchisor does not have a federally registered trade mark for their franchise brand, they may also need to register their FDD in four additional states due to the broad scope of those states’ “business opportunity” laws:  Connecticut, North Carolina, South Carolina and Maine.

Where there are state franchise pre-sale registration laws – that is, in the Registration States listed in 1.2 Franchise Regulation – the registration process is similar from state to state, but each state has its own particular requirements and forms. In Michigan, the “registration” process simply involves filing a one-page notice with the state. In Wisconsin and Indiana, the FDD along with certain state-specific forms signed by an executive of the franchisor (certifying the accuracy of the contents of the FDD) need to be filed with the state, but the state does very little, if any, review of those documents and routinely responds with an “effective letter” (stating the franchise registration is effective) within a short period of time. Hawaii rarely, but occasionally responds to registration filings with comments, although it is not clear from Hawaii’s franchise statute that its franchise administrator actually has authority to require a franchisor to respond to its comments (but franchisors generally do).

In the remainder of the states previously listed, state examiners review the FDD, forms and other required materials (such as Franchise Seller Disclosure Forms) submitted to them, may issue comment letters to the franchisor which must be addressed to the examiner’s satisfaction, and will then issue an “effective letter” regarding the franchise registration. In some states, depending on the number and nature of comments from the examiner, this can result in a back-and-forth correspondence process that can take weeks or months to complete before the state examiner is satisfied and issues the “effective letter”. Occasionally, different states’ franchise examiners will issue comments that contradict each other – in which case, they will either modify their comments or, if they are amenable, will allow their comments to be addressed on a state-specific basis by means of state-specific addenda to the FDD and/or to the form of franchise agreement that is included in the FDD. 

Thereafter, a franchisor must amend its FDD, through a filing with each applicable state where it offers franchises, any time that there is a material change in its franchise offering or the contents of its FDD – including, where required, by filing an amendment application with each state in which it offers and sells franchises. In addition, at least once per year, a franchisor must make a “renewal” filing (technically, an FDD amendment filing) to incorporate the financial statements for its most recently ended fiscal year, which in most cases are required to be audited.

The failure of a franchisor to register its franchise offering in any of the states where pre-sale registration is required can result in significant negative consequences. State franchise administrators are typically granted the power, through their state franchise laws, to:

• conduct investigations;
• halt a franchisor’s ability to legally offer or sell franchises in their state;
• impose fines for unauthorised franchise sales activities in their state; and
• require a franchisor to takes steps to assure its discontinuance of such unauthorised franchise sales activity, and to report to the franchise administrator periodically regarding this.

Note that most state franchise registration statutes define “fraudulent” and “unlawful” practices quite broadly. Any violation of a franchise registration statute, including any rules or regulations promulgated thereunder, and any attempt to compel a franchisee’s waiver of any given statute’s provisions are, under most state franchise registration statutes, declared fraudulent and unlawful practices. If state franchise administrators exercise their broad powers to investigate franchise sales and uncover evidence of fraud, unlawful franchise sales practices or other violations of applicable franchise laws, the administrators can institute civil proceedings seeking (without limitation):

• restitution;
• damages;
• injunctions;
• fines and penalties; and
• court-ordered receiverships. 

Many state franchise administrators also possess “stop order” powers – the ability to suspend a franchisor’s ability to offer or sell franchises. Moreover, violation of state franchise registration requirements in many states gives rise to criminal liability which accrues on a per-violation basis.

Furthermore, many state franchise registration statutes confer upon franchisees a limited private right of action for, respectively, rescission of the franchise agreement, damages and recovery of their attorneys’ fees. Under limited circumstances, punitive damages, over and above the franchisee’s “actual” damages, are permitted by some state franchise statutes.

While compliance with federal and state pre-sale disclosure requirements is a foundational element of a franchisor’s regulatory compliance obligations, it represents only one aspect of the broader legal framework that a franchisor must satisfy before offering or entering into franchise agreements.

Before commencing franchising activities, a franchisor should confirm that it is properly organised, duly authorised to conduct business under the laws of its jurisdiction of formation and any other applicable jurisdictions, and legally empowered to grant franchise rights. This includes verifying that the franchisor entity has been validly formed, maintains the requisite organisational authority and IP rights to enter into franchise agreements, and has obtained any necessary governmental or quasi-governmental approvals, including applicable business licences or permits. Depending on the nature of the franchise system, there may be industry-specific regulatory requirements that franchisors must satisfy before they can lawfully offer or sell franchises.

A franchisor must ensure that it has adequately protected the IP rights underlying its franchise system, including registering its principal trade marks with the United States Patent and Trademark Office, protecting proprietary and confidential materials, and securing licences to use and sublicense such IP to its franchisees in connection with their operation of franchised outlets.

Franchisors must also ensure that their FDD and all required exhibits – such as the franchise agreement and multi-unit development agreement – comply with applicable federal and state franchise laws, and that their franchise sales practices comply with all applicable laws prohibiting fraud, misrepresentation, and unfair or deceptive trade practices. This requires implementing appropriate training and oversight for franchise sales personnel and brokers, and, where required, ensuring that they are properly registered or licensed.

Finally, franchisors must satisfy all applicable state franchise registration, exemption and filing requirements before offering or selling franchises in those states. Collectively, these requirements form the regulatory framework governing a franchisor’s ability to lawfully establish and operate a franchise programme. There are no requirements that the franchisor demonstrate that the business has operated profitably for a period of time in a number of locations before the franchisor can begin offering and selling franchises.

There is no minimum or maximum duration applicable to a franchise agreement as a result of legal/regulatory requirements.

While nothing under federal franchise law – principally the FTC Franchise Rule, as amended – gives a franchisee a statutory renewal right, certain states have enacted “franchise relationship laws” that restrict when a franchisor may refuse to renew a franchise agreement. These restrictions (in the relatively few states where they apply) vary from jurisdiction to jurisdiction and depend on the underlying facts (whether the franchisor has good cause to refuse to renew), the language of the state’s relationship law and how it has been interpreted by the courts over time (which is subject to change as each state’s common law evolves over time).

Under the franchise relationship laws of the following states, a franchisor generally must have “good cause” and/or similar legally sufficient reason to refuse to renew a franchise agreement: Arkansas, Connecticut, Delaware, Hawaii, Indiana, Iowa (unless the franchisor is withdrawing from the market area), Michigan, Minnesota, Nebraska, New Jersey, Puerto Rico, Rhode Island, the US Virgin Islands and Wisconsin.

In certain states with relationship laws, compensation by the franchisor to the franchisee is payable upon non-renewal by the franchisor without good cause – such as California, where the compensation is the fair market value of the franchised business and assets, plus any damages caused by the violation. However, in California, if the franchisor lawfully refuses to renew, and retains control of the franchise premises, the franchisor must repurchase all the franchisee’s inventory, supplies, equipment, fixtures and furnishings at the franchisee’s original cost minus depreciation. This repurchase obligation does not apply in certain situations.

Note that in some states, such as California, the franchise relationship statutory provisions are intricate and the requirements can be complex and nuanced depending on the situation; details of all situations are not treated in this summary. Other states where compensation is payable upon non-renewal by the franchisor include Connecticut (the franchisor must pay fair and reasonable compensation for inventory, supplies, equipment and furnishings bought from the franchisor or franchisor-approved sources), Hawaii, Illinois (under certain circumstances), Iowa (in rare cases, and if the franchisor wishes to be able to enforce a post-term non-compete covenant in the franchise agreement), Michigan (but in very limited circumstances), Puerto Rico (if without just cause), Rhode Island (if franchisee so elects), and Washington State (where they must compensate for fair market value and goodwill, unless the franchisor gives one year advance notice of non-renewal and the franchisor agrees in writing not to enforce any covenant against competition).

Commercial agency laws do not affect franchise relationships and agreements in the USA in the way that they do in many other countries, in terms of compensation for goodwill.

Similar to non-renewal, certain states have franchise relationship laws that restrict when a franchisor may terminate a franchise agreement. These restrictions apply regardless of what is stated in the franchise agreement. Typically, these restrictions require “good cause” (and/or similar concepts/reasons) for a franchisor to be permitted to terminate the franchise agreement, and in some states require that the franchisee receive a minimum amount of prior notice and opportunity to cure (such as 30 or 60 days) before termination is permitted. There are typically exceptions for certain types of franchisee defaults where no notice or cure period (or a shorter period) is required prior to termination. At the federal level, the FTC Franchise Rule does not impose any particular restrictions on a franchisor’s termination rights.

The following states/territories have relationship laws restricting termination rights of franchisors with general applicability (not limited to specific industries): Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi (except no “good cause” requirement applies there), Missouri (but with no specific “good cause” requirement), Nebraska, New Jersey, Puerto Rico, Rhode Island, Virginia, the U.S. Virgin Islands, Washington and Wisconsin.

Local mandatory law does not generally grant statutory termination rights to the franchisee specifically. However, in many states and under common law in the United States generally, if one party materially breaches a contract, the other party is permitted to terminate the contract based on that material breach even if the contract does not expressly permit it to do so. This concept may apply to franchise agreements as well, depending on the context and the extent of the breach. In addition, the concept of an implied covenant of good faith and fair dealing has been held to apply to every franchise agreement regardless of whether it is expressly stated in the agreement. If a franchisor’s breach of material obligations under a franchise agreement is egregious enough to violate that implied covenant, the breach may – depending on the circumstances, any specific contrary language in the contract, and applicable law – support the franchisee’s decision to unilaterally terminate the agreement.

Unlike some foreign jurisdictions, the United States does not maintain a separate body of competition law specifically governing franchising. Instead, competition-related issues arising in the franchise context are generally governed by federal and state antitrust laws. Indeed, in the United States, the terms “competition law” and “antitrust law” are often used interchangeably. US antitrust law at the federal level (applicable throughout the USA, its territories and possessions) is principally embodied in the Sherman Act, the Clayton Act and the FTC Act, and at the state level is embodied in comparable antitrust state statutes. These laws collectively seek to preserve competitive markets by prohibiting unreasonable restraints of trade and other anti-competitive conduct. Although these statutes were not enacted specifically to regulate franchising, they nevertheless influence the franchise relationship by establishing limits on contractual restrictions and business practices that may affect competition.

Antitrust considerations typically arise after a franchise relationship is established or when a franchisor’s conduct affects market competition. Franchise agreements frequently contain competitive restraints, including territorial protections, in-term and post-term non-competition covenants, customer and employee non-solicitation provisions, pricing restrictions, exclusive supply arrangements, resale restrictions, and other vertical restraints. While these restrictions may limit certain aspects of a franchisee’s competitive freedom, courts have generally recognised that they may serve legitimate business purposes, including protecting trade marks and other IP, maintaining system-wide standards and uniformity, protecting the franchisor’s investments in the franchise system, and preserving brand consistency and goodwill.

Restrictive provisions in franchise agreements are not inherently unlawful. Most franchise-related restraints are evaluated under the “rule of reason”, which examines whether the restraint is reasonably related to legitimate business objectives and balances those objectives against any actual or potential harm to competition. Franchisors must therefore ensure that competitive restraints imposed on franchisees are reasonably tailored to protect legitimate business interests and comply with applicable antitrust laws.

Resale price restrictions illustrate how franchise-related restraints can vary by jurisdiction and by the type of restriction imposed. Under federal antitrust law, both minimum resale prices (“price floors”) and maximum resale prices (“price caps”) are generally subject to a rule-of-reason analysis. State law, however, may impose different or more restrictive requirements. California, for example, has historically taken a more restrictive approach to certain resale price restraints, although its current law is somewhat unsettled due to conflicting case law. Franchisors should therefore consider both the nature of the pricing restriction and the law of each applicable state.

Non-competition covenants likewise vary significantly by state. Although enforceability generally depends on the reasonableness of the restriction and the legitimate interests it protects, some states impose substantial limitations or prohibit certain post-term restrictions altogether. Where permitted, the duration and geographic scope generally must be reasonable in light of the circumstances, including the nature of the franchise, the market served, and whether the business operates in an urban, suburban or rural area. A reasonable territory may therefore differ depending on how far customers typically travel to patronise the franchised business. 

Non-solicitation provisions – particularly those restricting a franchisee from soliciting or hiring employees of the franchisor or other franchisees (often referred to as “anti-poaching” provisions) – have faced increased regulatory scrutiny in recent years. Several Registration States have limited the enforceability of these provisions, including by restricting them to managerial or higher-income employees. In response, many franchisors have voluntarily removed broad anti-poaching restrictions from their franchise agreements or narrowed their scope to apply only to managerial and/or higher-income personnel.

Franchisors may grant franchisees exclusive or protected territories. However, the term “exclusive territory” is often used loosely in areas of law outside franchising, and does not always provide the level of protection that the term means according to franchise regulators in the USA. A truly “exclusive” territory, in US franchising, generally means that the franchisee has the exclusive right to operate within a defined geographic area and the franchisor agrees not to operate, nor permit another franchisee or third party to operate, a competing business under the same trade marks within that area. This means that the franchisor does not reserve for itself the right to, for example, sell consumer packaged goods within that area to supermarkets, using the same trade marks. If the franchisor reserves any rights to itself to use the trade marks within the same area as the franchisee, it is not permitted to use the term “exclusive” to describe the grant.

In practice, many franchisors grant franchisees “protected” territories rather than fully exclusive territories, reserving rights to operate or authorise others to operate, through alternative channels of distribution, such as online sales platforms, mobile or delivery operations, national or regional accounts, wholesale arrangements and non-traditional venues. As a result, territorial protection typically prevents another traditional franchise location within the protected area but does not restrict other franchisors from business activities within that territory.

Franchisors may generally prohibit franchisees from operating competing businesses during the term of the franchise agreement to protect the franchisor’s legitimate business interests, including safeguarding trade secrets and other confidential information, preventing franchisees from diverting customers, and ensuring that franchisees devote their full efforts to operating and promoting their franchised business. However, post-termination non-competition provisions are often met with greater scrutiny and are governed primarily by state law rather than federal antitrust law. Historically, most states have permitted franchisors to enforce reasonable post-term non-competition covenants in franchise agreements where the restrictions are narrowly tailored in duration, geographic scope and prohibited activities, with one-year post-termination restrictions more likely to be enforceable than longer restrictions.

Some states have begun to limit or prohibit post-termination non-competition provisions in franchise agreements. For example, effective 1 July 2026, Virginia expressly prohibits such covenants in franchise agreements, subject to very limited exceptions such as a franchisee’s sale of its franchised business. California generally restricts enforcement of post-termination non-competition covenants except in very limited circumstances. Accordingly, franchisors must evaluate post-termination non-competition provisions on a state-by-state basis and cannot assume that a covenant enforceable in one jurisdiction will be enforceable in another.

A franchisor may generally require franchisees to purchase products and services exclusively from the franchisor, its affiliates or approved suppliers. Such requirements are common in franchise systems and may apply to inventory, equipment, supplies, technology, and other products and services used in operating the franchised business., but they remain subject to applicable federal and state antitrust and, in certain states, franchise relationship laws.

Exclusive purchasing requirements are generally permissible when they are reasonably related to legitimate business purposes, such as maintaining system quality and brand consistency, protecting the franchise system’s goodwill, or ensuring compliance with system standards. They may, however, raise antitrust concerns if they substantially restrict competition by limiting competing suppliers’ access to a significant portion of the relevant market. Courts generally apply a rule-of-reason analysis to balance the restriction’s competitive effects against its legitimate business justifications.

States that have franchise relationship laws address exclusive purchasing requirements from a different perspective. Some states restrict franchisors from imposing unreasonable purchasing requirements, including requirements that franchisees purchase excessive or unnecessary quantities of products or inventory. Other statutes regulate supplier arrangements, rebates or other financial benefits that franchisors may receive from required purchases.

The FTC Franchise Rule requires franchisors to disclose in Item 8 of their FDD any required purchases from the franchisor, its affiliates, designated suppliers or other approved sources, including exclusive purchasing requirements. However, to be enforceable against the franchisee, such purchasing requirements should also be expressly set forth in, or otherwise incorporated into, the franchise agreement.

A franchisor may generally reserve the right to use certain channels of distribution – including the internet, e-commerce platforms, mobile applications, delivery services, national and regional accounts, non-traditional locations, and other alternative distribution channels – within a franchisee’s territory, provided those rights are clearly disclosed and do not otherwise violate applicable antitrust or state franchise laws. Neither federal antitrust law nor franchise-specific statutes generally prohibit such reservations; however, franchisors must adequately disclose the scope of these reserved rights to prospective franchisees.

Under the FTC Franchise Rule, franchisors must disclose (in Item 12 of their FDD) whether the franchisor or its affiliates have established or reserve the right to establish or operate other channels of distribution, such as internet sales, within the franchisee’s territory using the franchisor’s principal trade marks or other trade marks, and whether franchisees will receive compensation for such sales. Franchisors must also disclose any restrictions on a franchisee’s ability to use the internet or other channels of distribution to solicit or accept orders from customers outside its territory. These reserved rights and corresponding franchisee restrictions should also be expressly addressed in the franchise agreement to ensure consistency between the contractual terms and the FDD.

US franchise law does not provide a general exemption from franchise regulation based solely on the competitive effects or benefits of a particular franchise system.

There have been court and administrative agency decisions in the USA holding a franchisor jointly liable with the franchisee for claims by employees, although court decisions in that respect have been relatively few compared to the number of court decisions holding the opposite.

The past ten years have been marked by regulatory uncertainty and whiplash from a US federal regulatory perspective in regard to what the joint employer standard shall be for holding a franchisor jointly liable with the franchisee for claims by employees, with standards of federal executive agencies changing as presidential administrations have gone back and forth between the two major political parties in the USA (Democrats and Republicans).

One source of the regulatory uncertainty has been the National Labor Relations Board (NLRB). After many decades of articulating a joint employer standard (based on its interpretation of common law agency principles) that required a franchisor to have substantial direct and meaningful control over essential terms and conditions of employment in order to be deemed a joint employer, in 2015 the NLRB expanded that standard to include reserved rights to exert control, as well as indirect and limited control, in its decision in Browning-Ferris Industries of California, Inc, 362 NLRB 1599 (2015). Much litigation ensued regarding the joint employer standard, including the appeal of that case to federal court in 2018, where the DC Circuit court upheld (in part) the NLRB’s broadened joint-employer standard.

In 2020, the NLRB turned to rulemaking to codify a different standard, similar to the pre-Browning Ferris standard, by issuing the joint employer rule: a narrower test making an entity a joint employer only if it possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment, and defined those terms.

In 2023, under a Democrat-run presidential administration, the NLRB rescinded its 2020 rule and issued a new joint employer rule, again expanding the standard for joint-employer status. However, that rule was vacated by a federal district court in Texas before it went into effect, in Chamber of Commerce of the USA v NLRB. The NLRB initially appealed the decision but voluntarily dismissed the appeal in July 2024, concluding the case.

On 27 February 2026, the NLRB issued a new joint employer rule, withdrawing its 2023 rule and reinstating its 2020 rule that an entity is a joint employer only if it possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment. However, that 2020 rule continues to be subject to challenge in pending lawsuits in the federal courts. In the meantime, at the time of this writing, federal legislation (the American Franchise Act, HR 5267) is pending a floor vote in the US House of Representatives, which would codify the 2020 joint employer standard with regard to franchises.

A further source of regulatory uncertainty over this subject in the last ten years has been another federal executive agency, the US Department of Labor (DOL), which has changed its rule in this regard as presidential administrations have changed from Republican to Democrat, and now back to Republican (although the current administration has thus far left in place its predecessor’s standard, while proposing a new one in April 2026).

Currently, the DOL still applies an “economic realities test” to determine when there is a joint employment relationship, determining the nature of the relationship based “upon the circumstances of the whole activity”. Various federal courts have articulated different factors under this same test, which is broad in nature and open to much interpretation. Cases in the last few years applying the “economic realities” test suggest that, in so much as a franchisor can demonstrate clear lines between themselves and their franchisees with respect to control over employees, it increases their chances of defending against a joint employment claim.

To complicate matters, in response to the uncertainty under federal law, in recent years some states have passed new regulations – in most (but not all) cases, in favour of franchisors, codifying a high bar for a franchisor to be deemed a joint employer in their state. These state-specific laws have resulted in a somewhat inconsistent patchwork of legal standards regarding who is a joint employer from state to state.

In the USA, a franchisor can be – but rarely is – held to be vicariously liable for loss and damage caused by the franchisee, whether by the franchisee’s acts or omissions, in certain circumstances, particularly where it is not made clear to third parties that the franchisee is independently owned and operated. In cases involving tortious conduct, breaches of contract, and consumer protection, some – but very few – court cases in recent years have held franchisors liable for franchisees’ acts or omissions.

A number of cases have been brought against hotel franchisors due to acts or omissions of their franchisees, under the auspices of the Trafficking Victims Protection Reauthorization Act (TVPRA), a federal law that addresses labour and sex trafficking. Plaintiffs have claimed, under the provisions of that federal law, that the franchisors they were suing have vicarious liability as well as perpetrator liability and even beneficiary liability, for knowingly benefiting from and failing to prevent trafficking at their franchisees’ hotels. In at least some cases, courts have allowed such cases to survive the franchisor’s motion to dismiss, based on plaintiffs’ allegations that the franchisor controlled or mandated the franchisee’s property management and reservation system, and safety standards and policies, among other things relating to the means or methods by which trafficking occurred at the franchised location.

On one hand, franchisors rely on the notion that a franchisee is an independent contractor liable for its own conduct, and not controlled by the franchisor. On the other hand, a few recent vicarious liability cases indicate that courts are questioning that notion in some contexts. The primary legal theories for vicarious liability of franchisors are actual agency (when a franchisor has granted a franchisee the authority to act on the franchisor’s behalf) and apparent agency. 

In regard to actual agency, a franchisor requiring a certain standard of performance, or retaining the right to control outcomes, is not enough; the franchisor must retain control over the method by which those outcomes are achieved by a franchisee, or the franchisee must be a mere instrument of the franchisor, in order for the franchisor to be held vicariously liable for loss and damage to others caused by the franchisee. Courts will dissect the extent of franchisor control over the franchisee on a case-by-case basis to make this determination. For example, if a franchisor exercises pervasive control over staffing, cash handling, software systems, customer complaint procedures, or the franchisee’s hiring and firing of staff members, a court may find an actual agency relationship to exist. It is important for a franchisor to draw a clear line between optional guidance to the franchisee and enforceable requirements that the franchisee must follow. With increasing integration of digital technology between franchisors and franchisees, such as centralised POS software, supply chain software, mobile ordering, apps, websites and even data protection systems, the argument for franchisor control of the franchisee’s actions becomes stronger in some contexts.

With respect to apparent agency, a franchisor may face vicarious liability if it creates the appearance that a franchisee is acting as the franchisor’s agent and a third party reasonably relies on that apparent authority to its detriment.

The risk of vicarious liability of a franchisor is increased:

• where there is a lack of clear provisions in a franchise agreement regarding the independent contractor relationship;
• where there is a lack of using conspicuous signage and messages in advertising, internet platforms, and other means of disclosing to customers that franchisees are independent of the franchisor;
• where a franchisor’s requirements imposed on franchisees go beyond protecting the brand and get into unnecessary controls over day-to-day business decisions of the franchisee; and
• where a franchisor does not consistently enforce its brand standards, allowing franchisees to stray into non-compliance with laws.

Generally, a franchisor may stipulate the laws of its jurisdiction as the governing law of the franchise agreement, but such designation may not be enforceable in every state. Virtually all state franchise laws contain anti-waiver provisions that expressly restrict franchisors from requiring franchisees to waive the protections afforded by these statutes, and attempting to do so may itself violate state law. Accordingly, a choice-of-law provision generally cannot deprive a franchisee of mandatory protections available under the franchise laws of the state in which the franchise is located or operated. For example, a New York franchisee may invoke the rights, remedies and protections available under the New York Franchise Sales Act even if the agreement is governed by California law.

The same principle applies to state franchise relationship laws, which often apply despite a contractual choice-of-law provision. Their protections, however, generally extend only to franchisees that satisfy the statute’s specific jurisdictional and other coverage requirements. Accordingly, when a franchisee operates units in multiple states, the applicability of each state’s franchise relationship laws must be evaluated separately based on the statute’s scope and requirements.

While choice-of-law provisions remain useful for determining the law governing matters not subject to mandatory franchise protections, franchisors cannot use them to circumvent non-waivable rights or remedies under applicable state franchise laws.

To ensure that franchisees receive the protections afforded by applicable state franchise laws, certain state franchise regulators may condition registration or approval of a franchisor’s FDD on the franchisor’s agreement being amended, or supplemented with a state-specific addendum, to expressly acknowledge the applicability of the state’s franchise laws and clarify that the contractual choice-of-law provision does not waive or limit any rights or remedies available to the franchisee under applicable state law.

US law generally does not require a franchise agreement to be governed generally by the law of the state in which the franchised business is located or operated. As a general matter, the parties may select the law of another jurisdiction to govern their contractual relationship, subject to applicable conflict-of-laws principles and the mandatory protections of any state franchise disclosure, registration or relationship laws that apply to the franchise.

However, there are two important caveats to the above. First, a contractual choice-of-law provision may not be used to waive, limit or avoid non-waivable statutory rights, remedies or obligations under applicable state franchise laws. Second, certain states expressly restrict or condition the use of out-of-state or foreign governing-law provisions in franchise agreements, particularly where the effect would be to deprive a franchisee of protections afforded by the law or public policy of the state in which the franchise is operated.

US law does not prescribe a uniform set of mandatory provisions for inclusion in all franchise agreements. Rather, mandatory contractual requirements are generally determined on a state-by-state basis and may vary by jurisdiction and, in some cases, franchise type. State franchise relationship laws may impose substantive rights, protections and obligations that apply by operation of law, regardless of the franchise agreement’s terms. Although such laws generally do not require these statutory rights and obligations to be expressly memorialised in the agreement, conflicting contractual provisions may be unenforceable and superseded by applicable law. Franchisors therefore generally retain broad drafting discretion, subject to applicable state franchise laws and non-waivable statutory protections.

For example, Washington law generally requires certain provisions in franchise agreements, including provisions addressing termination and renewal, to comply with statutory restrictions that limit a franchisor’s ability to terminate or refuse to renew a franchise. Similarly, Illinois law regulates termination and non-renewal and, in certain circumstances, requires a franchisor to provide advance notice and an opportunity to cure before termination. Prescribed state-specific addenda typically recite these provisions. However, these requirements can apply regardless of whether the agreement itself provides otherwise, illustrating why a franchise agreement that may be appropriate for one state may require state-specific modifications to comply with the requirements of another.

US federal law does not impose a uniform, nationwide “blacklist” of contractual provisions that are prohibited in franchise agreements. Instead, those states that have franchise relationship laws will primarily restrict the inclusion of certain provisions in franchise agreements as applied to franchises in the particular state at issue. These laws, which vary by jurisdiction and, in some cases, by the nature of the franchise, may expressly prohibit particular provisions or render provisions unenforceable when they conflict with mandatory statutory protections.

Common examples include:

• provisions that waive or limit statutory rights relating to termination, non-renewal, notice, cure periods, transfers or other franchise relationship protections;
• provisions permitting termination of the franchise agreement without “good cause” required by applicable law;
• provisions requiring franchisees to waive rights or remedies afforded by the applicable state law; and
• provisions imposing post-termination non-competition restrictions prohibited or limited under applicable state law.

State franchise relationship laws may also restrict provisions concerning choice of law, forum selection, arbitration and dispute resolution where those provisions have the effect of depriving franchisees of mandatory protections or access to remedies available under the law of the state in which the franchised outlet operates.

While franchisors generally have broad discretion in drafting their form of franchise agreement, that discretion is constrained by the mandatory franchise relationship laws of each applicable jurisdiction. Accordingly, a provision that is permissible in one state may be void or unenforceable in another. Franchisors commonly address these differences through state-specific addenda to their standard franchise agreements to ensure compliance with the requirements of applicable state franchise relationship laws.

Foreign judgments are easy to enforce in the USA, and foreign arbitration awards are enforced. The USA has been a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) since 1970, and that Convention is implemented in US law under Chapter 2 of the Federal Arbitration Act (in regard to arbitration awards). Generally, a foreign arbitration award or judgment can be enforced in the USA through a summary proceeding in US federal court, to convert it into a binding US federal judgment. US courts are generally very likely to enforce a foreign judgment or award, subject to narrow circumstances where grounds for refusal may apply.

US law does not generally impose restrictions on franchise fees, royalties or service fees, or an annual maximum payment in foreign currency of a maximum royalty. Subject to applicable state franchise laws, contract law, antitrust principles and other generally applicable laws, franchisors generally have substantial flexibility to establish franchise fees, royalties or service charges. The FTC Franchise Rule requires franchisors to disclose all fees and other payments that franchisees are required to pay, but it does not cap the amount that a franchisor may charge or impose other fee restrictions. The FTC reinforced this principle in its July 2024 Staff Guidance addressing so-called “junk fees”, which cautions that a franchisor may violate Section 5 of the FTC Act by imposing or collecting new fees that were not disclosed in the FDD and incorporated into the franchise agreement. The guidance states that “if a franchisor imposes or collects a new fee, through its operating manual or otherwise, that was not disclosed in the FDD and included in the franchise agreement, the franchisor may be engaging in an unfair act or practice in violation of Section 5 of the FTC Act”.

Certain state franchise laws impose additional restrictions on franchise fees and payment arrangements, including where such fees are unfair, discriminatory or inconsistent with mandatory franchise protections. For example, California and Washington have issued guidance addressing the imposition of fees through an operating manual or other means where those fees were not previously disclosed in the franchisor’s FDD. These requirements generally do not establish a maximum fee or royalty; rather, they limit a franchisor’s ability to impose fees that were not adequately disclosed or contractually authorised. Accordingly, franchisors generally have considerable flexibility in structuring their fee arrangements, provided that the fees are properly disclosed, contractually authorised, and consistent with applicable franchise, antitrust, consumer protection and other laws.

The application of withholding taxes or other taxes depends on whether the franchisor is a US or foreign entity. Payments of franchise fees, royalties and service fees to a US franchisor generally are not subject to withholding tax merely because they are made under a franchise agreement. Payments to a foreign (that is, based outside the USA) franchisor, however, may be subject to US federal withholding requirements.

The US Internal Revenue Code generally imposes 30% federal withholding tax on the gross amount of US-source fixed or determinable annual or periodical income paid to a foreign person, unless an applicable tax treaty or statutory exemption provides for a reduced rate or exemption. US-source royalties, including payments for the use of trade marks, trade names, franchise rights and other IP, generally fall within this rule. Thus, in the absence of an applicable treaty reduction or exemption, a franchisee that owes a foreign franchisor USD100,000 in royalties generally must withhold USD30,000 and remit it to the Internal Revenue Service (IRS).

Service fees are subject to different sourcing rules. Fees paid to a foreign franchisor for training, technical assistance, consulting or other services performed in the United States are generally subject to the 30% withholding rate. However, fees attributable to services performed entirely outside the United States are not subject to the 30% withholding rate, since the income for such services is not sourced in the United States. An applicable tax treaty may reduce or eliminate the withholding requirement if the treaty’s requirements are satisfied. The US franchisee, as the withholding agent, is generally responsible for deducting and remitting any required tax to the IRS and completing the required reporting requirements.

The United States does not generally impose foreign currency controls that restrict or prohibit the payment of franchise fees, royalties or other amounts to a foreign franchisor; no prior authorisation from a US central bank or the franchisee’s commercial bank is required. A commercial bank may, however, conduct routine compliance and due diligence checks before processing an international payment.

Having stated the above, cross-border payments to foreign-based franchisors remain subject to US economic sanctions laws administered by the Office of Foreign Assets Control (OFAC). In particular, payments involving a foreign franchisor located in, or owned or controlled by persons subject to, OFAC sanctions may be prohibited or may require OFAC authorisation. If a transaction is prohibited and no applicable general licence or exemption is available, the parties may need to obtain a specific OFAC licence before proceeding; otherwise, the payment may be blocked or rejected by the financial institution processing the transaction.

Generally, in the USA, there are no particular formalities that must be observed when signing a franchise agreement; no authentication or notarisation is generally required, nor are witnesses or registrations.

As an aside, it should be mentioned that in terms of state filing forms that a franchisor must file in order to apply for franchise registration or exemption, some of the Registration States require forms to be signed with notarisation of the forms, such as the Uniform Consent to Service of Process. To the extent that notarisation is required on those forms, while remote e-notarisation is now available in some circumstances (and has been accepted by a number of the Registration States), remote e-notarisation is not yet universally accepted by all Registration States and therefore a handwritten signature before a notary is still the most universally reliable method of executing the state filing forms.

Electronic signatures, such as Docusign, are generally permitted and considered valid and enforceable for franchise agreements throughout the United States at this point. In addition, contracts (including franchise agreements) can generally be signed using PDFs, facsimile, photocopy or other versions of signatures other than the original, “wet ink” signature pages, although it is generally advisable to include a provision in the franchise agreement expressly permitting such forms of signature page and acknowledging that they have the same force and effect as originals.

It should be mentioned that in terms of state filing forms that a franchisor must file in order to apply for franchise registration or exemption, some of the Registration States do not yet accept Docusign or other e-signature platforms, although all of the Registration States do now accept scans of pages that have handwritten signatures on them rather than requiring original “wet ink” signed forms to be submitted to them (this became universally accepted during the COVID-19 pandemic and has remained in place since that time).

There are no document taxes or stamp duties in the USA with regard to franchise agreements or franchise registrations. Although the 14 Registration States do each charge their own fees for filing franchise registration or exemption filings (and the fee amounts vary from state to state), these would not be considered document taxes or stamp duties.