A franchise exemption is a legal exception that allows a franchisor to offer or sell a franchise without filing or registering the FDD in a particular state. Exemptions vary widely but typically apply when the franchisee is highly experienced, the investment is large, or the transaction structure meets certain criteria.
Even when an exemption applies, the franchisor must still comply with the federal FTC Franchise Rule.
Franchise exemptions:
reduce regulatory burden
accelerate access to specific buyers
eliminate filing fees
bypass examiner review
permit isolated or specialized franchise transactions
However, misusing an exemption can lead to enforcement actions, penalties and rescission rights.
Examples include:
Large investment exemption
Experienced franchisee exemption
Seasoned franchisor exemption
Fractional franchise exemption
Isolated sale exemption
Minimum net worth exemption
Each state sets its own exemption rules and documentation requirements.
To rely on an exemption, franchisors must:
confirm the buyer meets exemption criteria
keep documentation supporting the exemption
still provide the FDD unless the exemption also waives disclosure
avoid offering the same exemption broadly unless allowed
Some exemptions require filing a notice; others require no filing at all.
Franchise Registration State
FDD Renewal
Material Change
Franchise Exemption
Non Registration State
Stop Order
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Franchise Territory Mapping
Integrated Document Signing
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Last updated: November 25, 2025
