What Are The Franchise Laws in Iowa?
Iowa is a non-registration state, meaning that franchisors are not required to register their Franchise Disclosure Document (FDD) with the state before offering or selling a franchise.
However, franchisors must still comply with the Federal Trade Commission’s (FTC) Franchise Rule, which requires the delivery of a current FDD to a prospective franchisee at least 14 days before any agreement is signed or payment is made.
Despite not having a registration requirement, Iowa’s franchise laws, particularly the Iowa Franchise Act, provide significant protections for franchisees.
The Act regulates the franchisor-franchisee relationship and contains provisions concerning termination, non-renewal, and transfers. Specifically, it mandates “good cause” for termination and prohibits franchisors from refusing to renew a franchise agreement without at least six months’ prior notice. It also provides for a franchisee’s right to transfer their business to a qualified transferee.
Furthermore, Iowa has a business opportunity law that would typically apply to franchises.
However, franchisors are exempt from this law if they comply with the FTC Franchise Rule’s disclosure requirements. This means that as long as a franchisor provides a prospective franchisee with the FDD as required by federal law, they are not subject to the separate business opportunity law.
In summary, this unique legal landscape underscores the importance for franchisors to have a clear understanding of both federal and state regulations, even in a non-registration state like Iowa.
Here is a list of franchise lawyers you can hire in Iowa
Rush Nigut
Brick Gentry, P.C.
6701 Westown Parkway, Suite 100
West Des Moines, Iowa 50266
Wade H. Schut
700 Walnut, Ste 1300
Des Moines, Iowa
