Colorado Franchise Law and FDD Registration

Colorado Franchise Law

Colorado is a non-registration state, but there are still important federal regulations franchisors need to know about before operating there.

For business owners that are new to franchising, there are some important factors to take into consideration before opening up shop in any state. Because the laws governing franchises vary widely across the U.S., it’s important to understand the rules and regulations that regulate franchises in any state you’re considering doing business in.

Below, we’ll explore Colorado’s franchise laws and examine how franchised businesses are regulated in the Centennial State.

Colorado Franchise Law

In contrast to the Franchise Registration States, where the franchising process is regulated by supplemental laws extending beyond federal franchise regulations, Colorado is considered a non-registration state.

As a non-registration state, Colorado has no supplemental state laws requiring franchisors to register their disclosure documents with a state agency, and no laws requiring franchisors to notify the state when they intend to offer or sell a franchise opportunity there.

Additionally, Colorado has no business opportunity laws governing the sale of business opportunities in the state, and no franchise relationship laws regulating a franchisor’s actions after the sale of a franchise.

Who Regulates Franchises in Colorado?

As a non-registration state that also lacks business opportunity and franchise relationship laws, regulation of franchises in Colorado is deferred to the Federal Trade Commission and the requirements of the FTC Franchise Rule.

What are the Fees?

Because franchises operating in Colorado are not regulated by laws at the state level, there are no franchise registration or renewal fees established by the state. Additionally, Colorado does not impose any registration expiration dates on franchises.

Federal Franchise Law

Although franchises operating in Colorado enjoy some freedom when it comes to state-level regulations and fees, it’s important to note that franchisors are still required to adhere to federal franchise regulations regardless of the states in which they operate.

Under the Federal Trade Commission Amended Franchise Rule, 16 CFR Parts 436 and 437 (the “FTC Franchise Rule”), franchisors in all 50 U.S. states are required to provide prospective franchisees with a disclosure document containing 23 specific disclosures regarding the franchise offering, its officers, and its franchisees at least 14 days prior to the sale of a franchise location.

This large and complex legal document, referred to as the Franchise Disclosure Document (FDD), contains important information about the franchised business including but not limited to the sale of the franchise, territory sizes, royalties, affiliates, financials and more.

The data contained in the FDD is intended to provide prospective franchisees with enough information about the franchise opportunity to weigh its benefits and risks before entering into an agreement with a franchisor.