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WES MOORE, Governor Ch. 413
Chapter 413
(House Bill 730)
AN ACT concerning
Business Regulation – Maryland Franchise Registration and Disclosure Law –
Alterations
(Franchise Reform Act)
FOR the purpose of altering the period of time within which the Securities Commissioner
in the Office of the Attorney General may exercise a power under certain provisions
of law governing the sale of franchises; requiring the Securities Commissioner to
require that a certain franchise registration exemption be indexed to inflation or
deflation based on a certain index; altering the period of time within which an action
for liability under a certain provision of law pertaining to franchise offers for sale
must be brought; prohibiting a franchisor and certain others from inhibiting the
right of franchisees to associate for certain purposes; providing that an action may
be brought against a certain franchisor under certain circumstances; establishing
the Maryland Franchise Disclosure Document Renewal Fast–Track Review Pilot
Program and generally relating to the Maryland Franchise Registration and
Disclosure Act.
BY repealing and reenacting, with amendments,
Article – Business Regulation
Section 14–102, 14–202, 14–210, 14–214, 14–227, and 14–233
Annotated Code of Maryland
(2024 Replacement Volume and 2025 Supplement)
BY adding to
Article – Business Regulation
Section 14–219.1 and 14–233
Annotated Code of Maryland
(2024 Replacement Volume and 2025 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – Business Regulation
14–102.
The General Assembly finds that:
(1) THE SALE OF BUSINESS OPPORTUNITIES IS A FIELD THROUGH
WHICH INDIVIDUALS USE THEIR IDEAS TO CREATE ECONOMIC OPPORTUNITY;
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Ch. 413 2026 LAWS OF MARYLAND
(2) BUSINESSES ADD TREMENDOUS ECONOMIC VALUE AND DRIVE
INVESTMENT IN THE STATE THAT CREATES CRITICAL ECONOMIC GROWTH;
[(1)] (3) the sale of business opportunities is a field in which investment
problems and deceptive practices are common; and
[(2)] (4) this subtitle is needed to regulate this field adequately and
prevent these deceptive practices.
14–202.
(a) The General Assembly finds that:
(1) FRANCHISING HAS PLAYED A ROLE IN THE STATE’S ECONOMY BY
ENABLING RESIDENTS TO OPEN AND OPERATE BUSINESSES IN THE STATE UNDER
ESTABLISHED SYSTEMS AND BRANDS;
(2) the widespread sale of franchises [has], WHILE OFFERING
OPPORTUNITIES TO STATE RESIDENTS, ALSO INVOLVES COMPLEX AGREEMENTS
AND SUBSTANTIAL INVESTMENTS THAT CAN CREATE AND HAVE created many
investment and business [problems] RISKS FOR FRANCHISEES, FRANCHISORS, AND
SUBFRANCHISORS; and
[(2)] (3) franchisees [have suffered substantial] MAY SUFFER losses
when the [franchisor or its representative] FRANCHISEE has not BEEN given complete
AND ACCURATE information about:
(i) the NATURE OF THE franchisor–franchisee relationship;
(ii) the TERMS AND OBLIGATIONS OF THE franchise agreement;
and
(iii) the business experience AND OPERATIONAL PRACTICES of the
franchisor or its representative.
(b) The intent of this subtitle is to:
(1) give each prospective franchisee necessary information about any
franchise offer;
(2) [prohibit the sale of franchises if the sale] PROMOTE HONESTY,
TRANSPARENCY, AND ACCOUNTABILITY, AND FAIR DEALING IN THE OFFER AND
SALE OF FRANCHISES;
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WES MOORE, Governor Ch. 413
(3) PREVENT PRACTICES THAT would [lead to] RESULT IN fraud or a
likelihood that the franchisor’s representations would not be fulfilled; [and]
[(3)] (4) protect the franchisor–franchisee relationship; AND
(5) SUPPORT THE CONTINUED GROWTH OF FRANCHISING AS A
BUSINESS MODEL IN THE STATE.
14–210.
(a) (1) Whenever the Commissioner finds that a person has violated or is about
to violate this subtitle or a regulation adopted or order passed under it, the Commissioner
may order the person to cease and desist from the further offer to sell or sale of the franchise
until the offer or sale complies with this subtitle.
(2) After passage of a cease and desist order, the alleged violator may
submit to the Commissioner a written request for a hearing.
(3) The hearing shall begin:
(i) within 15 business days after the Commissioner receives the
request for a hearing; or
(ii) at a later date, with the consent of the alleged violator.
(4) Unless there is a timely hearing, the cease and desist order is rescinded.
(b) (1) Whenever the Commissioner finds that a person has violated or is about
to violate this subtitle or a regulation adopted or order passed under it, the Commissioner
may sue in the circuit court to enjoin the violation or enforce this subtitle or the regulation
or order.
(2) The court shall:
(i) determine if a violation of this subtitle has been or is about to be
committed; and
(ii) if so, pass any order the court considers necessary to prevent the
violation or remove the effects of the violation and prevent it from continuing or being
renewed in the future.
(3) The court may exercise all equitable powers necessary for this purpose,
including:
(i) injunction;
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(ii) revocation, forfeiture, or suspension of the charter authority or
privileges of a business organization operating under the laws of the State;
(iii) dissolution of a corporation or association organized under the
laws of the State;
(iv) suspension or termination of the right of a corporation or
association organized under the laws of another state or country to do business in the State;
(v) restitution;
(vi) restraining order;
(vii) award of damages to be paid by a franchisor or subfranchisor to
a person injured by a violation of this subtitle; and
(viii) appointment of a receiver or conservator.
(4) The court may not require the Commissioner to post bond.
(c) The Commissioner may not exercise a power under this section more than [3]
5 years after the violation occurs.
14–214.
(a) Except as otherwise provided in this subtitle, a person must register the offer
of a franchise with the Commissioner before the person offers to sell, through
advertisement or otherwise, or sells the franchise in the State.
(b) The registration requirement of this section does not apply to:
(1) a transaction by an executor, administrator, sheriff, receiver, trustee in
bankruptcy, guardian, or conservator;
(2) an offer to sell or sale of a franchise that is substantially similar to a
franchise already owned by the offeree or buyer; and
(3) any other transaction that the Commissioner exempts by regulation
because:
(i) the transaction is not within the purpose of this subtitle; and
(ii) the registration of the transaction is not necessary or appropriate
in the public interest or for the protection of investors.
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WES MOORE, Governor Ch. 413
(c) (1) The registration requirement of this section does not apply to the offer
to sell or sale of a franchise by a franchisee for the franchisee’s own account, or the offer to
sell or sale of the entire area franchise owned by a subfranchisor for the subfranchisor’s
own account.
(2) A sale is not effected by or through a franchisor merely because a
franchisor has a right to approve or disapprove a different franchisee.
(d) (1) The Commissioner may require by regulation that a franchisor or
subfranchisor who claims under subsection (b)(3) of this section to be exempt from the
registration requirements of this section:
(i) file with the Commissioner a notice of claim of exemption in the
form that the Commissioner requires; and
(ii) pay a fee of $250.
(2) The franchisor or subfranchisor shall sign and verify the notice of claim
of exemption.
(E) THE COMMISSIONER SHALL REQUIRE THE FRANCHISOR NET EQUITY
AMOUNTS SET FORTH IN THE FRANCHISE REGISTRATION EXEMPTION UNDER
COMAR 02.02.08.10D.1 TO ACCOUNT FOR INFLATION OR DEFLATION BASED ON
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS BY THE U.S.
DEPARTMENT OF LABOR.
14–227.
(A) THIS SECTION APPLIES ONLY TO:
(1) A FRANCHISEE OR FRANCHISOR WHO IS A RESIDENT OF THE
STATE; OR
(2) A FRANCHISED BUSINESS THAT OPERATES OR WILL BE OPERATED
IN THE STATE.
[(a)] (B) (1) A person who sells or grants a franchise is civilly liable to the
person who buys or is granted a franchise if the person who sells or grants a franchise offers
to sell or sells a franchise:
(i) without the offer of the franchise being registered under this
subtitle; or
(ii) by means of an untrue statement of a material fact or any
omission to state a material fact necessary in order to make the statements made, in light
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Ch. 413 2026 LAWS OF MARYLAND
of the circumstances under which they are made, not misleading, if the person who buys or
is granted a franchise does not know of the untruth or omission.
(2) In determining liability under this subsection, the person who sells or
grants a franchise has the burden of proving that the person who sells or grants a franchise
did not know and, in the exercise of reasonable care, could not have known of the untruth
or omission.
[(b)] (C) The person who buys or is granted a franchise may sue under this
section to recover damages sustained by the grant of the franchise.
[(c)] (D) A court may order the person who sells or grants a franchise to:
(1) rescind the franchise; and
(2) make restitution to the person who buys or is granted a franchise.
[(d)] (E) (1) Joint and several liability under this section extends to:
(i) each person who directly or indirectly controls a person liable
under this section;
(ii) each partner in a partnership liable under this section;
(iii) each principal officer or director of a corporation liable under this
section;
(iv) each other person that has a similar status or performs similar
functions as a person liable under this section; and
(v) each employee of a person liable under this section, if the
employee materially aids in the act or transaction that is a violation under this subtitle.
(2) However, liability under this subsection does not extend to a person
who did not have knowledge of or reasonable grounds to believe in the existence of the facts
by which the liability is alleged to exist.
[(e)] (F) An action under this section must be brought within [3] THE EARLIER
OF:
(1) 5 4 years after the grant of the franchise; OR
(2) THE LATER OF:
(I) 3 YEARS AFTER THE GRANT OF THE FRANCHISE; OR
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WES MOORE, Governor Ch. 413
(II) 2 YEARS AFTER THE DATE OF THE INITIAL COMMENCEMENT
OF OPERATIONS OF THE FRANCHISE THE FRANCHISE OPENED TO THE PUBLIC.
14–233.
(A) ALL FRANCHISEES HAVE THE RIGHT TO JOIN A TRADE ASSOCIATION
CONSISTING OF OTHER FRANCHISEES OF THE SAME FRANCHISE AND TO
PARTICIPATE IN THE TRADE ASSOCIATION FOR ANY LAWFUL PURPOSE.
(B) A FRANCHISOR MAY NOT, DIRECTLY OR INDIRECTLY, THROUGH ANY
OFFICER, AGENT, OR EMPLOYEE:
(1) RESTRICT OR INHIBIT THE RIGHT OF A FRANCHISEE TO JOIN A
TRADE ASSOCIATION CONSISTING OF OTHER FRANCHISEES OF THE SAME
FRANCHISE; OR
(2) PROHIBIT THE RIGHT OF FREE ASSOCIATION AMONG
FRANCHISEES FOR ANY LAWFUL PURPOSE.
(B) (C) (1) A PERSON WHO VIOLATES SUBSECTION (A) (B) OF THIS
SECTION MAY BE SUED IN CIRCUIT COURT FOR:
(I) TEMPORARY OR PERMANENT INJUNCTIVE RELIEF;
(II) DAMAGES, IF ANY; AND
(III) COSTS OF THE SUIT, INCLUDING ANY REASONABLE
ATTORNEY’S FEES.
(2) THE INJUNCTIVE RELIEF MAY BE SOUGHT FROM THE CIRCUIT
COURT IN THE COUNTY WHERE THE INDIVIDUAL WHO IS ALLEGED TO BE IN
VIOLATION OF SUBSECTION (A) OF THIS SECTION FRANCHISEE RESIDES OR THE
FRANCHISE AFFECTED BY THE VIOLATION CONDUCTS BUSINESS.
(3) WHEN SEEKING AN INJUNCTION UNDER THIS SECTION, THE
PLAINTIFF MAY NOT BE REQUIRED TO ALLEGE OR PROVE ACTUAL DAMAGES
SUFFERED TO OBTAIN INJUNCTIVE RELIEF.
(4) AN ACTION UNDER THIS SUBSECTION MUST BE BROUGHT WITHIN
THE EARLIER OF:
(I) 2 YEARS AFTER THE ALLEGED VIOLATION OCCURRED; OR
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Ch. 413 2026 LAWS OF MARYLAND
(II) 1 YEAR AFTER THE DISCOVERY BY THE PLAINTIFF OF THE
FACTS OF THE ALLEGED VIOLATION.
[14–233.] 14–234.
This subtitle is the Maryland Franchise Registration and Disclosure Law.
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read
as follows:
Article – Business Regulation
14–219.1.
(A) IN THIS SECTION, “PROGRAM” MEANS THE MARYLAND FRANCHISE
DISCLOSURE DOCUMENT RENEWAL FAST–TRACK REVIEW PILOT PROGRAM.
(B) (1) THERE IS A MARYLAND FRANCHISE DISCLOSURE DOCUMENT
RENEWAL FAST–TRACK REVIEW PILOT PROGRAM.
(2) THE COMMISSIONER SHALL ADMINISTER THE PROGRAM.
(C) (1) THE COMMISSIONER SHALL ESTABLISH A STANDARD FOR THE
REVIEW AND APPROVAL OF INCOMPLETE FRANCHISE DISCLOSURE DOCUMENTS,
INCLUDING FRANCHISE DISCLOSURE DOCUMENTS THAT WERE NOT SUBMITTED FOR
PARTICIPATION IN THE PROGRAM.
(2) THE COMMISSIONER MAY USE A TECHNOLOGY SYSTEM TO ASSIST
THE REVIEW OF DOCUMENTS AS REQUIRED UNDER THIS SECTION.
(D) THE COMMISSIONER SHALL ADOPT REGULATIONS TO CARRY OUT THIS
SECTION, INCLUDING REGULATIONS ESTABLISHING REQUIREMENTS AND
PROCEDURES FOR THE SUBMISSION AND APPROVAL OF FRANCHISE DISCLOSURE
DOCUMENTS.
(E) ON OR BEFORE SEPTEMBER 30, 2031, THE COMMISSIONER SHALL, IN
ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT ARTICLE, SUBMIT TO
THE SENATE FINANCE COMMITTEE AND THE HOUSE ECONOMIC MATTERS
COMMITTEE AND POST ON THE WEBSITE OF THE OFFICE OF THE ATTORNEY
GENERAL A REPORT THAT INCLUDES:
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WES MOORE, Governor Ch. 413
(1) THE NUMBER OF FRANCHISE DISCLOSURE DOCUMENTS
SUBMITTED BY FRANCHISORS UNDER THE PROGRAM;
(2) THE NUMBER OF FRANCHISORS THAT PARTICIPATED IN THE
PROGRAM;
(3) THE AMOUNT OF TIME REQUIRED TO ADMINISTER THE PROGRAM;
(3) (4) AN ANALYSIS OF WHETHER THERE WAS ANY IMPACT ON
FRANCHISE DISCLOSURE DOCUMENTS SUBMITTED OUTSIDE THE PROGRAM,
INCLUDING THE AMOUNT OF TIME REQUIRED FOR THE ANALYSIS OF FRANCHISE
DISCLOSURE DOCUMENTS THAT WERE REJECTED;
(4) (5) A DESCRIPTION OF PROGRAMS IN OTHER STATES THAT
ADDRESS EXEMPTIONS FOR CERTAIN ESTABLISHED FRANCHISORS, INCLUDING THE
ELIGIBILITY STANDARDS BY WHICH THE APPROPRIATE AUTHORITY MAKES
DETERMINATIONS REGARDING ESTABLISHED FRANCHISORS;
(5) (6) AN ANALYSIS OF WHETHER THE PROGRAM EFFECTS
CONSUMER PROTECTION, AND THE EXTENT TO WHICH, THE PROGRAM MAINTAINS
OR ENHANCES THE PROTECTIONS AFFORDED TO PROSPECTIVE FRANCHISEES
UNDER THE MARYLAND FRANCHISE REGISTRATION AND DISCLOSURE LAW,
INCLUDING:
(I) AN EVALUATION OF WHETHER THE EXPEDITED REVIEW OF
FRANCHISOR REGISTRATION APPLICATIONS UNDER THE PROGRAM DIMINISHES
THE EFFICACY OF THE DISCLOSURE REQUIREMENTS AND REVIEW STANDARDS; AND
(II) A DESCRIPTION OF ANY FRANCHISEE PROTECTION
BENEFITS THAT MAY RESULT FROM A MORE TIMELY AND EFFICIENT REGISTRATION
PROCESS; AND
(6) (7) INFORMATION REGARDING THE EFFICIENCY OF THE
REVIEW OF FRANCHISE DISCLOSURE DOCUMENTS SUBMITTED FOR PARTICIPATION
IN THE PROGRAM AND FRANCHISE DISCLOSURE DOCUMENTS THAT WERE NOT
SUBMITTED FOR PARTICIPATION IN THE PROGRAM, INCLUDING INFORMATION
CONCERNING:
(I) COMMENTARY PERIODS;
(II) AMENDMENT PERIODS;
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Ch. 413 2026 LAWS OF MARYLAND
(III) THE TIME FOR COMPLETION OF SUBMISSION AND REVIEW
OF FRANCHISE DISCLOSURE DOCUMENTS;
(IV) THE NUMBER OF REVIEWERS; AND
(V) THE AVERAGE NUMBER OF FRANCHISE DISCLOSURE
DOCUMENTS SUBMITTED EACH YEAR.
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2026. Section 2 of this Act shall remain effective for a period of 6 years and, at
the end of September 30, 2032, Section 2 of this Act, with no further action required by the
General Assembly, shall be abrogated and of no further force and effect.
Approved by the Governor, May 12, 2026.
– 10 –Every fact on this page links to its source, starting with the official bill record.