A stop order is a legal directive issued by a franchise regulator in a registration or notice filing state that immediately prohibits a franchisor from offering or selling franchises. A stop order is typically issued when the regulator determines that the franchisor’s Franchise Disclosure Document, financial condition or sales practices are non compliant, misleading or pose a risk to franchise buyers.
Stop orders may be temporary or permanent depending on the severity of the violation.
A stop order is one of the most serious regulatory actions in franchising. It may:
halt all franchise sales in the state
trigger additional investigations
lead to rescission rights for franchisees
require corrective actions and formal amendments
damage the franchisor’s reputation
affect approvals in other states
create delays in renewal cycles and expansion plans
require FDD updates and new disclosures
Stop orders signal that the regulator believes the franchisor’s disclosures or conduct may harm prospective franchisees.
A state may issue a stop order for several reasons, including:
incomplete or misleading disclosures in the FDD
failure to amend after a material change
improper Item 19 claims or unlawful earnings disclosures
failure to respond to examiner comments
unregistered franchise sales
misrepresentations made during the franchise sales process
failure to include required state addenda
Stop orders are designed to protect consumers and ensure full compliance with state franchise law.
When a stop order is issued:
The franchisor is prohibited from offering or selling franchises in that state.
The regulator outlines violations or deficiencies.
The franchisor must respond with corrections, amendments or explanations.
The regulator may lift the stop order once compliance is achieved.
In severe cases, additional penalties or rescission rights may apply.
A stop order remains in effect until the state formally withdraws or vacates it.
Stop orders differ from:
Temporarily pause sales while compliance issues are reviewed.
Reject an application for registration.
Terminate an approved registration due to violations.
Stop orders are urgent, proactive tools regulators use to protect prospective franchisees.
Franchise Registration State
FDD Renewal
Material Change
Franchise Examiner
Franchise Exemption
Notice Filing State
Non Registration State
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Last updated: November 25, 2025
