Texas is brimming with franchise opportunities. This guide equips you with the essential knowledge to navigate Texas franchise law in 2024. We'll cover registration, the franchisor-franchisee relationship, and strategies to succeed in the Texas market.
1. Registration
Unlike many states, Texas remains a non-registration state for franchises. This means franchisors generally don't need to register their offerings with the state before selling franchises in Texas. However, a one-time Business Opportunity Exemption Notice must still be filed with the Texas Secretary of State. It's important to remember that some states dorequire franchise registration, adding complexity for multi-state businesses.
Source: "Texas Secretary of State - Business Opportunity Exemption Notice"
2. The Federal Franchise Rule is Your Compass
Texas law defers to the federal Franchise Rule established by the Federal Trade Commission (FTC). This rule mandates the creation of a comprehensive Franchise Disclosure Document (FDD) that details the franchise offering. The FDD serves as a roadmap for potential franchisees, disclosing information about the franchisor's financial performance, experience, litigation history, and details regarding the franchise agreement, fees, and territory.
Source: "Federal Trade Commission - Franchise Rule"
3. The Relationship Between Franchisor and Franchisee
While Texas lacks specific laws governing the ongoing relationship between franchisors and franchisees, general contract law principles apply. This means both parties are expected to act in good faith and deal fairly with each other. Additionally, the Texas Deceptive Trade Practices Act (DTPA) can be a potential recourse for franchisees who believe they've been misled by a franchisor.
