Franchising in America is getting a facelift, and it is happening one state at a time. For years, franchising followed a predictable federal roadmap under the Federal Trade Commission’s (FTC) Franchise Rule. However, recent legal and political shifts at the state level are reshaping the terrain, with more states adding their requirements, protections, and twists to the franchisor-franchisee relationship.
Entrepreneurs looking to expand or invest in franchises in 2025 need to pay close attention not just to the federal rules but to the growing patchwork of state-specific franchise laws. This article discusses what you need to know about the franchise legal landscape, how it may affect your next business move, and why you should seek guidance from a franchise lawyer from a reputed firm, like Franchise.Law.
What New Trends Impact Franchise Agreements in the United States?
The following trends influence how franchises are set up and run in the United States:
- Joint Employer Liability
Many states are now considering holding franchisors liable as joint employers of franchise staff. Some states, like Connecticut and Oregon, are keen on providing local definitions that ensure wider protections for workers. Lawmakers are working to pass laws regarding these protections. If that happens, it will result in more exposure for franchisors, like wage disputes and discrimination claims.
- Franchisee Protections and Collective Bargaining
Another trend in U.S. franchise agreements is that some states now let franchisees join forces to negotiate contract terms or handle disputes together. This ensemble may take the form of an association that protects the rights of its members.
If this move succeeds, it may limit the ability of franchisors to make decisions centrally from the office, especially when local laws offer contrary provisions.
- Technology Fee Transparency
As digital platforms like mobile apps, customer management systems, and AI-based scheduling apps become more integrated into franchising, several states demand transparency around technology-related fees. Franchisees are pushing back against hidden costs for platforms they cannot control or modify.
Some states are proposing bills that would require franchisors to spell out which software tools are optional, which are mandatory, and what those tools will cost annually. These proposals, once passed and implemented, may result in a more transparent approach to franchise arrangements.
What Entrepreneurs Considering a Franchise Should Do Now
If you plan to build or buy a franchise in 2025, there is no better time to start preparing for it than now. Conducting relevant research and speaking with an attorney who understands the local franchise law in the state you want to set up can be helpful.
To get things right, here are some key things about franchising you should note:
- Read the Fine Print
It is important to review more than just the Franchise Disclosure Document before entering into a franchise agreement. Try as much as you can to also review the registration and relationship laws in place and understand what they say about waiting periods or renewal rights.
- Budget for Legal Flexibility
There is no one-size-fits-all approach to franchising, meaning changes may occur from state to state. Entrepreneurs considering this arrangement on a national level should be open to the different requirements and be ready to meet them.
- Stay Ahead of Political Shifts
You should always prepare for the possibility of local politics influencing state franchise laws. You may want to research the local political landscape in the area where you plan to set up a franchise and see how to navigate it.
Conclusion
Franchising remains one of the most scalable and accessible business models in the United States, but the legal playbook is shifting. In 2025, entrepreneurs who ignore state-specific rules do so at their peril. A different approach will be to do your due diligence or seek the guidance of a skilled franchise attorney before reaching a franchise agreement or decision. They can help you understand the legal steps involved with creating a franchise and create a plan that fits your needs.
