This is the second article in a three-part series (Part 1) focusing on what every corporate counsel should know about franchising. Part 2 provides an overview of the various laws that apply to franchise relationships that are intentionally or unintentionally created.
In 1970, California passed the Franchise Investment Law, the first law to regulate the offer and sale of franchises. The California Franchise Investment Law was followed by the passage of franchise laws in several states and the promulgation by the Federal Trade Commission (FTC) of its Rule on Franchising in 1979. There is little uniformity in these laws, which means that a patchwork of laws may need to be evaluated in connection with one transaction.