Oklahoma Franchise Law and Registration

Classification: Non-registration state

Registration Fee: n/a

Renewal Fee: n/a

Registration expiration: n/a

Oklahoma is classified as a non-registration state because it has no laws requiring franchisors to register with the state before offering or selling their franchise. But Oklahoma does have laws regulating the sale or offering of business opportunities under the Oklahoma Business Opportunity Sales Act, Okla. Stat. tit. 71, §§ 801 et seq. (the “Business Opportunity Law”). Under the Business Opportunity Law, business-opportunity sellers are required to register with Oklahoma Department of Securities, and provide written disclosures to prospective business-opportunity purchasers, before offering or selling a “business opportunity” in the state.

The Business Opportunity Law defines “business opportunity” broadly, such that a franchise would theoretically fall within its coverage. However, under § 803(6), franchisors are exempt from the duties and liabilities imposed under the Business Opportunity Law if the franchisor delivers to the franchisee either (1) a Uniform Franchise Offering Circular (UFOC) prepared in accordance with guidelines adopted by the North American Securities Administrators Association; or (2) a Franchise Disclosure Document (FDD) prepared in accordance with the Federal Trade Commission Amended Franchise Rule, 16 C.F.R. §§ 436.1 et seq. (the “FTC Rule”). But delivery of either of the two documents mentioned above must be timely.

For a franchisor to fully comply with the requirements for exemption under the Business Opportunity Law, the franchisor must deliver its UFOC or FDD fourteen days prior to the earlier of either the (1) execution of a franchise agreement or other binding legal obligation on the franchisee; or (2) receipt of a franchisee’s payment in connection with the offer or sale of the franchise. This exemption is automatically effective and does not require franchisors to make a filing of any sort.

Thus, franchisors in Oklahoma are exempt from the Business Opportunity Law if they deliver a validly issued UFOC or FDD to a franchisee fourteen days before the execution of a legally binding agreement with the franchisee, or a franchisee’s payment in connection with the offer or sale of the franchise. Oklahoma’s Business Opportunity Law should not cause franchisors to fret, as the FTC Rule already requires Oklahoma franchisors to disclose a validly issued FDD to prospective franchisees prior to entering into a franchise agreement or accepting any franchisee payments. Thus, so long as Oklahoma franchisors are compliant with the FTC Rule, they are likely to be exempt from the Business Opportunity Law.