Iowa
Franchise Registration
Iowa
Iowa does not have franchise laws. However, a franchisor must still comply with the federal regulations established under the Federal Trade Commission (“FTC”) Franchise Rule when offering and selling franchises in the state of Iowa.
In addition, Iowa has business opportunity laws with registration requirements.
Iowa defines a franchise as a contract between a seller and purchaser where the parties agree to all of the following:
- A franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan prescribed in substantial part by a franchisor.
- The operation of the franchisee’s business pursuant to such a plan is substantially associated with the franchisor’s business and trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate.
Iowa is not a franchise registration state and therefore does not require any type of franchise filing or registration for a franchisor to offer or sell franchises in Iowa. Franchises are exempt from Iowa’s business opportunity registration filing requirements under Iowa Code §551.A4 (1)(b).
However, the statute exempting franchise sales from business opportunity laws also requires that a franchisor have a current FTC compliant FDD to offer or sell franchises in Iowa and comply with the Franchise Rule disclosure timing provisions.
Iowa does have certain statutes that govern the franchise relationship and termination of the relationship. See Iowa Code §523H. Sections 3 and 4 of these Iowa statutes govern jurisdiction and waivers, voiding certain provisions in a franchise agreement that contravene the language in the statutes.
Transfers and terminations are also addressed in the statutes. Iowa Code §523H.5 provides instances where a franchisor may have a right of first refusal in a transfer and includes language regarding reasonable restrictions or requirements a franchisor may place on a franchisee transfer. Regarding terminations, Iowa Code §523H.7 prohibits the termination of a franchisee without a minimum 30 days to cure unless “good cause” exists. Good cause includes circumstances such as when a franchisee declares bankruptcy or is insolvent, fails to operate the business for five consecutive business days, the parties agree in writing to terminate, etc. Further, a failure of the franchisee to pay monies due under the franchise agreement need not exceed 30 days to be reasonable prior to termination. Iowa Code §523H.7(1)-(2).
More Information about Iowa’s Franchise Laws
You can find more information about Iowa’s Franchise Laws here:
Iowa's Franchise Statutes
If you offer a business opportunity in Iowa, we can help you determine if, and how, your company must comply with Iowa’s Franchise or Business Opportunity laws.
Iowa Business Opportunity Laws
Iowa has Business Opportunity Laws, which define a “Business opportunity” means an opportunity to start a business according to the terms of a contract between a seller and purchaser in which the purchaser provides an initial investment exceeding five hundred dollars; the seller represents that the seller or a person recommended by the seller is to provide to the purchaser any products, equipment, supplies, materials, or services for the purpose of enabling the purchaser to start the business; and the seller represents, directly or indirectly, orally or in writing, any of the following:
- The seller or a person recommended by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, or other similar devices, on premises which are not owned or leased by the purchaser or seller.
- The seller or a person recommended by the seller will provide or assist the purchaser in finding outlets or accounts for the purchaser’s products or services.
- The seller or a person specified by the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser.
- The purchaser will derive income from the business which exceeds the price paid to the seller.
- The seller will refund all or part of the price paid to the seller, or repurchase any of the products, equipment, or supplies provided by the seller or a person recommended by the seller, if the purchaser is dissatisfied with the business.
- The seller will provide a marketing plan.
Iowa Code § 551A.1 (2)(a)
Iowa Business Opportunity Requirements
Iowa does not require registration of business opportunities.
However, pursuant to Iowa Code §551A.7, sellers of business opportunities must file an irrevocable consent appointing the secretary of state to be the seller’s attorney to receive service of any lawful process relating to any suit (noncriminal), action or proceeding arising under the Iowa statutes.
- Represented that the purchaser will earn, is likely to earn, or can earn an amount in excess of the initial payment paid by the purchaser for participation in the seller assisted marketing plan.
- Represented that there is a market for the product, equipment, supplies, or services, or any product marketed by the user of the product, equipment, supplies, or services sold or leased or offered for sale or lease to the purchaser by the seller, or anything, be it tangible or intangible, made, produced, fabricated, grown, bred, modified, or developed by the purchaser using, in whole or in part, the product, supplies, equipment, or services that were sold or leased or offered for sale or lease to the purchaser by the seller assisted marketing plan seller.
- Represented that the seller will buy back or is likely to buy back any product made, produced, fabricated, grown, or bred by the purchaser using, in whole or in part, the product, supplies, equipment, or services that were initially sold or leased or offered for sale or lease to the purchaser by the seller assisted marketing plan seller. (Cal Civ Code § 1812.201).
Iowa Franchise Exemption from Business Opportunity Laws
Franchises are excluded from the Business Opportunity Laws. Iowa Code § 551A.4.
More Information about Iowa’s Business Opportunity Laws
You can find more information about Iowa’s Business Opportunity Laws here:
Chapter 55 Iowa Business Opportunity Sales Act
Business Opportunity Right to Cancel
If you offer a business opportunity in Iowa, we can help you determine if, and how, your company must comply with Iowa’s Business Opportunity laws.
If you would like to learn more about our franchise services and franchise compliance in Iowa, contact us or call (757) 263-4596 to schedule a consultation. You can also visit our interactive map to explore franchise laws in other states.
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