Georgia is classified as a business opportunity state, and its laws relating to business opportunities are found under its Multilevel Distribution and Sale of Business Opportunities statute (the “Business Opportunity Law”), which is codified at Ga. Code §§ 10-1-410 et seq. A franchise constitutes a “business opportunity” under Ga. Code §10-1-410(2)(A)(iii), though not stated explicitly, if the total initial payment required is greater than $500. But under that same section, franchises are excluded from the Business Opportunity Law’s requirements if the offering or selling of the franchise is made in conjunction with the licensing of a registered trademark or service mark. Thus, Georgia franchisors are exempted from the Business Opportunity Law if they have either (1) a federally registered trademark or (2) a trademark registered in Georgia.
For franchisors without a federally registered trademark or trademark registered in Georgia, the franchise constitutes a “business opportunity” and will likely be disadvantaged. Under the Business Opportunity Law, a seller of a business opportunity is required, among other things, to have an agent in Georgia authorized to receive service; to furnish state-required disclosures in the offer or sale of a business opportunity; and in some instances, to obtain a surety bond in the amount of $75,000. Moreover, franchisors cannot collect the full amount of the purchase price upon execution of the franchise agreement. Rather, a franchisor can initially collect no more than 15% of the purchase price, with the balance being paid into an escrow account established with a bank or attorney, and can collect the remaining 85% percent sixty days following the start of the franchisee’s business.
Because of the disadvantages posed to franchisors by the Business Opportunity Law, Georgia franchisors without a registered trademark should try to obtain one. If not federally, Georgia trademark registration is relatively simple: it requires only that the trademark be used somewhere in the state of Georgia; that the owner of the trademark submit three examples of the trademark being currently used in commerce, and that the owner pay a registration fee of $15 per application. Without a registered trademark in Georgia or at the federal level, the only way franchise is exempt from the Business Opportunity Law is if the total initial payment to be made to the franchisor is less than $500, which is highly unlikely.