FRANCHISING IN GEORGIA
Registration or Filing Required?
Yes (if no trademark)
Business Opportunity Laws?
Yes
Georgia does have business opportunity laws that sellers of business opportunities must adhere to especially if you do not have a trademark. Most franchisors are exempt from complying with those laws if their franchise is the owner or licensee of a registered trademark, either in Georgia or at the federal level.
The Georgia Multilevel Distribution and Sale of Businesses Opportunity Statute defines a business opportunity as the sale or lease of any products, equipment, supplies or services for the purpose of enabling the buyer to start a business, where the seller represents one of the following:
- That the seller will provide locations or assist the buyer in finding locations for the use or operation of vending machines, racks, display cases, or other devices;
- The seller will purchase products made by the buyer using the supplies or services sold to them by the seller; or
- That the seller will provide a sales or marketing program in conjunction with the agreement (and the buyer has to pay a fee of greater than $500). This does not apply to sales or marketing programs made in conjunction with the license of a registered trademark.
A franchise business would fall under the definition of a “business opportunity” in Georgia, except for the exclusion of sales or marketing programs made in conjunction with the licensing of a registered trademark. Thus, a franchisor will typically be exempt if it has a trademark registered federally or in the state of Georgia. However, if the franchisor’s business or offer falls under subsections 1 or 2 above, it will still be subject to Georgia’s business opportunity laws. There are several other types of business listed in the state’s statutes that do not qualify as business opportunities, but these would not apply to most franchisors.
If a franchise has a registered trademark, either with the USPTO or the state of Georgia (and does not otherwise qualify as a business opportunity), the franchise does not need to file any notice or letter with the state and can proceed to sell franchises while relying on that exemption. If you do not have a registered trademark for your franchise you will be subject to provisions of the Business Opportunity Law. This Law requires stringent disclosure documents, restricting when and how initial franchise fees can be collected, obtaining surety bonds, and maintaining an agent in the state authorized to receive service of process.
It is best to have a trademark and at minimum get a trademark in Georgia which only requires that the trademark be used somewhere in the state of Georgia, that the owner of the trademark submit three examples of the trademark being currently used in commerce, and that the owner pay a $15 registration fee.