The short answer to the question posed in the title is, “Yes, but…” Franchises can indeed be exempt from the Florida Sale or Lease of Business Opportunities Act (the “Act”). However, it’s best not to assume that your transaction is exempt. It’s also important to understand how the Act works.
Business Opportunities and the Florida Sale or Lease of Business Opportunities Act
This Act is also known as the “Sale of Business Opportunities Act.” And here’s where you might question how the Act defines “business opportunity.” The definition contained in the Act is:
“‘Business opportunity’ means the sale or lease of any products, equipment, supplies, or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller …”
The Act goes on to state four represents the seller must make.
‘Business opportunity’ does not include the sale of:
- certain ongoing businesses,
- certain not-for-profit sales, and
- the sale or lease of laundry and dry cleaning equipment.
Most people would consider a franchise to be a business opportunity. Does this law related to the sale or lease of a business related to franchises?
How the Act Applies to a Franchises
Section 559.802, Part VII, relates to the sale of a franchise. In fact, this section explains why a franchise might be exempt from the Act’s requirements.
Specifically, the sale must be a franchise under the definition and regulations established by the Federal Trade Commission (FTC). Also, the franchisor must file a notice confirming that it is complying with FTC rules before selling or offering to sell a franchise. Finally, the law applies to the sale or lease of a franchise “located in this state or to a resident of this state …”
The Franchise Exemption form states that anyone attempting to sell a franchise
“… is exempt from the Sale of Business Opportunities Act provided they meet the requirements of the law and annually file a Franchise Exemption application before offering for sale or selling a franchise to be located in this state or to a resident of this state.”
The critical takeaway here is the franchise exemption application. Franchise owners must submit this application to the Florida Department of Agriculture and Consumer Services, Division of Consumer Services. The exemption lasts for one year. After that, the franchise owner must re-apply every year.
About the Author
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business, franchise, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.