The FTC and Franchise Law in Georgia

Even if your franchising operations are confined to a single state, the United States Federal Trade Commission (FTC) has regulatory authority over all franchisors under the federal Franchise Rule. This rule is the foundation that defines the interaction between the FTC and franchise law in Georgia.

To understand their state regulatory obligations for compliance, franchisors can read and attempt to process all 154 pages of the Franchise Rule Compliance Guide, or they can call our attorneys at Franchise.Law for helpful advice and guidance. Our legal team is fully licensed in North Carolina, but has a multi-jurisdictional practice that extends to matters governed by federal FTC laws and regulations.

The FTC and Oversight Over Franchisors

The state maintains certain authority over businesses chartered in the state under its Business Opportunity Law, Official Code of Georgia Annotated § 10-1-411, but the FTC’s regulations on franchises, businesses, and investment opportunities are the primary governing rules and laws that franchisors must comply with. Before a franchisor can enroll any franchisees, the FTC requires franchisors to disclose certain things, including:

• Upfront and ongoing fees franchisees will be required to pay
• Geographical and other restrictions imposed on particular franchises
• Thorough and accurate information about the franchisor’s background and experience
• Rules and regulations that the franchisee must follow in its operations and management of the franchise
• Historical and current financial status of the franchisor, including any past bankruptcy filings or other litigations

A franchisor’s failure to make these disclosures or to provide accurate information that enables a franchisee to assess the risks associated with its investment can lead to an FTC enforcement action, and substantial fines and penalties may occur if violations exist. In Georgia, you could reduce your risk of FTC actions and other possible penalties by retaining an experienced attorney from Franchise.Law to guide you through the FTC’s rules and franchise compliance.

What Is the Interaction Between the FTC’s Oversight and State Laws?

The FTC’s Franchise Rule under 16 Code of Federal Regulations §§ 436, 437 requires specific disclosures that franchisors must make before executing franchise agreements and accepting funds from franchisees. The FTC does not record or register franchisors or their businesses. They mandate the distribution of information that a business might otherwise receive in an entity’s due diligence analysis before the purchase.

The state does not have a specific franchise law, but it may require you to register as a business opportunity seller if your company does not have other business registrations, such as a trademark. Additionally, the Georgia Fair Business Practices Act under Official Code of Georgia Annotated § 10‑1‑390 empowers the state’s attorney general to file actions against businesses that have conducted deceptive practices. Consult with our lawyers at Franchise.Law to determine how the FTC and Georgia laws may impact your franchising operations.

Call a Seasoned Attorney for Advice About FTC and Georgia Franchise Rules

If you have built a business that is ready to franchise, you should not risk all of your efforts by not fully understanding the FTC and franchise laws in Georgia. Federal and state regulators want you and your franchisees to thrive, so they have established laws and regulations to protect you and your franchisees by making critical information about your business available for inspection and review.

The attorneys at Franchise.Law work with franchisors to achieve the best and most cost-effective results. Please call us to schedule a conference and explore your questions regarding FTC and state franchise compliance.