South Carolina
Franchise Registration
South Carolina
South Carolina is not a franchise registration state, but it regulates business opportunities under the South Carolina Business Opportunity Sales Act. Many traditional franchise offerings involving a registered trademark fall outside the Act’s marketing-program provision. However, this is not a blanket franchise exemption, and franchisors should confirm that no other statutory trigger applies.
South Carolina Franchise Laws
South Carolina does not require franchisors to register or file a Franchise Disclosure Document (FDD) before offering or selling franchises in the state.
However, franchisors must comply with the Federal Trade Commission’s Franchise Rule, which requires providing a current FDD to prospective franchisees at least 14 calendar days before execution of any agreement or payment of any consideration.
South Carolina Franchise Relationship and Termination Laws
South Carolina does not have generally applicable franchise relationship or termination laws. It does not impose franchise-specific good-cause termination requirements, nonrenewal restrictions, transfer rights, or notice and cure obligations.
The terms of the franchise agreement and general contract law principles govern franchise relationships, renewals, transfers, and terminations.
South Carolina Business Opportunity Laws
South Carolina regulates business opportunities under the South Carolina Business Opportunity Sales Act, S.C. Code Ann. §§ 39-57-10 through 39-57-80.
A business opportunity generally includes the sale or lease of products, equipment, supplies, or services that enable a purchaser to start a business when the purchaser must pay the seller a fee exceeding $250 and the seller represents that:
- The seller will provide or assist in finding locations for vending machines, racks, display cases, currency-operated amusement devices, or similar equipment on premises not owned or leased by the purchaser or seller;
- The seller will purchase products made, produced, fabricated, grown, bred, or modified by the purchaser using the supplies, services, or chattels sold to the purchaser;
- The purchaser is guaranteed income exceeding the price paid, or the seller will refund all or part of the price, or repurchase products, equipment, or supplies, if the purchaser is dissatisfied; or
- The seller will provide a sales or marketing program that will enable the purchaser to derive income exceeding the price paid. This provision does not apply to a sale or marketing program made in conjunction with the licensing of a registered trademark or service mark.
The Act also excludes certain transactions from the definition of a business opportunity, including qualifying sales of ongoing businesses, bona fide wholesale inventory purchases, and offerings by sellers with a consolidated net worth of at least $10 million. (S.C. Code Ann. § 39-57-20)
South Carolina Business Opportunity Requirements
The offer or sale of a business opportunity in Georgia requires filing a Consent to Service with the state. Further, an appropriate business opportunity disclosure statement and a bond may be required. (O.C.G.A. § 10-1-412).
Registered-Trademark Exclusion
South Carolina does not provide a blanket exemption for every franchise that complies with the FTC Franchise Rule. Instead, the Act provides that its sales-or-marketing-program provision does not apply when the program is offered in conjunction with the licensing of a registered trademark or service mark.
Accordingly, many traditional franchise offerings may fall outside the Act. However, an offering may still qualify as a business opportunity if it satisfies another statutory trigger, such as a location-assistance representation, a product-purchase commitment, an income guarantee, or a refund or repurchase arrangement. No separate franchise exemption filing is required to rely on the registered-trademark exclusion.
Purchaser Remedies
A purchaser may void a noncompliant business opportunity contract within one year of the contract date, upon written notice to the seller, if the seller uses untrue or misleading statements, fails to provide the required disclosures, fails to deliver the equipment, supplies, or products necessary to begin substantial operation of the business within 45 days of the delivery date stated in the contract, or uses a contract that does not satisfy the Act’s requirements. An injured purchaser may also recover damages and reasonable attorneys’ fees. Violations constitute unfair trade practices under South Carolina law. (S.C. Code Ann. § 39-57-80)
More information about South Carolina's Business Opportunity Laws
For more information, please visit:
South Carolina Business Opportunity Sales Act
South Carolina Secretary of State – Business Opportunities
South Carolina Business Opportunity Registration and Biennial Renewal Application
South Carolina Business Opportunity Registration & Biennial Renewal Application
Learn MoreIf you offer a business opportunity in South Carolina, we can help you determine if, and how, your company must comply with South Carolina’s Business Opportunity Laws.
If you would like to learn more about our franchise services and franchise compliance in South Carolina, 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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