In most parts of the country, states require anyone opening a franchise to register their business. Oregon is not one of those states. You do not have to file or register your Franchise Disclosure Document (FDD) as long as you maintain a current registration. However, Oregon does have franchise relationship laws for managing franchisor and franchisee relationships.
A franchise defined under Oregon law
According to Oregon’s Trade Regulation and Practices Act, a franchise is when:
- An entity is given the right to engage in selling, distributing, or offering services or goods based on a marketing system or plan held substantially in part by a franchisor.
- A franchisee operation is significantly associated with a franchisor’s trademark, trade name, service, market, or other commercial IP designated by a franchisor.
- An entity gives consideration to the franchisor to transact business.
Franchise regulation in Oregon
Before selling or offering a franchise, the franchisor must disclose the FDD no less than 14 days prior to any contract signing or payment on the agreement. The FDD disclosure is a statement that outlines franchisor information that the franchisee should be aware of, including:
- Franchisor background
- Any financial or legal matters, such as bankruptcy
- Ongoing and initial expenses
- Any required training and advertising
The franchisor is also expected to maintain a complete set of records, books, sale details, and sale proceeds distribution.
Complaints and abuses
The state will look at any allegations made against a franchisor that implies false or misleading statements or a failure to reveal a material fact. The franchisee will need to complete and submit a complaint form detailing the issue they wish to resolve.
It’s important to note that Oregon law has no avenue for a civil remedy or private right of action for franchisees who want to file a claim against a franchisor. This condition does not mean a franchisee cannot take a franchisor to court, but there are no specific laws that protect either party’s unique interests in these disputes.
Launching a well-known franchise off the ground requires research to align business goals with the right company. Food-based franchises are common, but other industries to explore include fitness centers, home services, auto repair, retail, and dry cleaners. It is essential to incorporate a franchise’s established guidelines; however, franchisees should also have an independent business plan. These plans will help get franchisee approval, obtain financing, and target unique success goals.
