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Louisiana is classified as a business opportunity state, and its laws relating to the sale or offering of business opportunities are found under its Business Opportunity Sellers and Agents Law, La. Stat. §§ 51:1821 et seq. (the “Business Opportunity Law”). Under the Business Opportunity Law, a franchise offering qualifies as a “business opportunity” if the initial fee is greater than $300, and the franchisor represents that it will provide a sale or marketing program to the franchisee that will enable the franchisee to derive income totaling more than the price paid for the business opportunity. If a franchise falls within this definition, and most likely will, the franchisor is required to appoint the Louisiana Secretary of State as its agent for service of process and to maintain a surety bond of $50,000.
However, under La. Stat. § 51:1821(1)(d), franchisors are exempt from complying with the requirements of the Business Opportunity Law if the franchise offering is made in conjunction with the licensing of a registered trademark or service mark. Thus, Louisiana franchisors will not be subject to the duties and liabilities imposed by the Business Opportunity Law if, in conjunction with the sale of the franchise, they license a trademark or service mark registered with either the United States Patent and Trademark Office (USPTO) or the state of Louisiana. And Louisiana franchisors are not required to file proof of their federal or state registered trademark with the state.
For franchisors without a federally registered trademark, the requirements to register a trademark with the state of Louisiana are set forth under its Trademarks, Trade Names, and Domain Names Law, La. Stat. §§ 49:211 et seq. (the “Trademark Law”). The Trademark Law specifies what information should be included in an application to register a trademark with the state and requires applicants to pay a $75 filing fee. A franchise offering that falls within Louisiana’s definition of “business opportunity,” but that is not made in conjunction with the licensing of a registered trademark with the USPTO or Louisiana, will not be exempt from the requirements of the Business Opportunity Law.
Regardless of whether a franchisor is exempt from the Business Opportunity Law by offering franchises in conjunction with a registered trademark, like in every state, Louisiana franchisors are nonetheless required to disclose a validly issued Franchise Disclosure Document (FDD) prior to entering into a franchise agreement or accepting any payments from a franchisee, and to comply with other federal franchise regulations set forth in the Federal Trade Commission Amended Franchise Rule, 16 C.F.R. §§ 436.1 et seq. (the “FTC Rule”).
