How are franchises regulated?

The Federal Trade Commission (FTC) regulates franchising on the federal level. The Commission created the franchise rule over thirty years ago, and it is now the Amended FTC Franchise Rule. This Rule is the groundwork for all franchising in the United States.

Additionally, there are 14 states with their own state franchise laws, and they vary, but they are generally in line with the FTC Rule. However, there are 27 other states that have business opportunity laws that further regulate this type of venture, but in certain states franchises are exempt from these processes.

North Carolina has a Business Opportunity Act, meaning that if someone sells their business in North Carolina, and the buyer plans to make money off of that business, it generally constitutes a business opportunity. If the franchisor is selling a business that uses a federally registered trademark, that franchise is exempt from registration in North Carolina in deference to the FTC rules.

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