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Because Arizona is not a franchise registration state, franchisors do not need to separately register their Franchise Disclosure Document (FDD) with the state before offering or selling a franchise in the state. Arizona is, however, a business opportunity state. Thus, one cannot sell or offer to sell what Arizona statutorily defines as a “business opportunity” unless he or she files a verified registration with the state and pays the annual registration fee.
But like most other state business opportunity laws, Arizona’s “Business Opportunity Sales” law, which is codified at Ariz. Rev. Stat. §§ 44-1271, –1282, does not impact how franchisors in Arizona operate. This is so, because Ariz. Rev. Stat. §§ 44-1271(1)(c)(iii) specifically excludes the sale of franchises, as defined under 16 C.F.R. § 436.1(h)) of the Federal Trade Commission Amended Franchise Rule (the “FTC Rule”), from the law’s definition of a “business opportunity.” Thus, a franchisor is exempted from complying with Arizona’s Business Opportunity Sales law if operating a “franchise,” and compliant with the FTC Rule’s other requirements scattered throughout 16 C.F.R. §§ 436.1–.11.
Therefore, a franchisor who is compliant with the FTC Rule is not required to make any additional filings before providing an FDD to a prospective franchisee in Arizona. Reach out to learn more about the franchise process in Arizona.