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*hb0730*
HOUSE BILL 730
C2 6lr1979
CF SB 415
By: Delegate Korman
Introduced and read first time: February 2, 2026
Assigned to: Economic Matters
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 6, 2026
CHAPTER ______
AN ACT concerning 1
Business Regulation – Maryland Franchise Registration and Disclosure Law – 2
Alterations 3
(Franchise Reform Act) 4
FOR the purpose of altering the period of time within which the Securities Commissioner 5
in the Office of the Attorney General may exercise a power under certain provisions 6
of law governing the sale of franchises; requiring the Securities Commissioner to 7
require that a certain franchise registration exemption be indexed to inflation or 8
deflation based on a certain index; altering the period of time within which an action 9
for liability under a certain provision of law pertaining to franchise offers for sale 10
must be brought; prohibiting a franchisor and certain others from inhibiting the 11
right of franchisees to associate for certain purposes; providing that an action may 12
be brought against a certain franchisor under certain circumstances; establishing 13
the Maryl and Franchise Disclosure Document Renewal Fast –Track Review Pilot 14
Program and generally relating to the Maryland Franchise Registration and 15
Disclosure Act. 16
BY repealing and reenacting, with amendments, 17
Article – Business Regulation 18
Section 14–102, 14–202, 14–210, 14–214, 14–227, and 14–233 19
Annotated Code of Maryland 20
(2024 Replacement Volume and 2025 Supplement) 21
BY adding to 22
Article – Business Regulation 23
2 HOUSE BILL 730
Section 14–219.1 and 14–233 1
Annotated Code of Maryland 2
(2024 Replacement Volume and 2025 Supplement) 3
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 4
That the Laws of Maryland read as follows: 5
Article – Business Regulation 6
14–102. 7
The General Assembly finds that: 8
(1) THE SALE OF BUSINESS OPPORTUNITIES IS A F IELD THROUGH 9
WHICH INDIVIDUALS USE THEIR IDEAS TO CREATE ECONOMIC OPPORTUNITY; 10
(2) BUSINESSES ADD TREME NDOUS ECONOMIC VALUE AND DRIVE 11
INVESTMENT IN THE STATE THAT CREATES CRITICAL ECONOMIC GROWTH; 12
[(1)] (3) the sale of business opportunities is a field in which investment 13
problems and deceptive practices are common; and 14
[(2)] (4) this subtitle is needed to regulate this field adequately and 15
prevent these deceptive practices. 16
14–202. 17
(a) The General Assembly finds that: 18
(1) FRANCHISING HAS PLAYED A ROLE IN THE STATE’S ECONOMY BY 19
ENABLING RESIDENTS T O OPEN AND OPERATE B USINESSES IN THE STATE UNDER 20
ESTABLISHED SYSTEMS AND BRANDS; 21
(2) the widespread sale of franchises [has], WHILE OFFERING 22
OPPORTUNITIES TO STATE RESIDENTS , ALSO INVOLVES COMPLEX AGREEMENTS 23
AND SUBSTANTIAL INVE STMENTS THAT CAN CRE ATE AND HAVE created many 24
investment and business [problems] RISKS FOR FRANCHISEE S, FRANCHISORS, AND 25
SUBFRANCHISORS; and 26
[(2)] (3) franchisees [have suffered substantial ] MAY SUFFER losses 27
when the [franchisor or its representative ] FRANCHISEE has not BEEN given complete 28
AND ACCURATE information about: 29
(i) the NATURE OF THE franchisor–franchisee relationship; 30
HOUSE BILL 730 3
(ii) the TERMS AND OBLIGATION S OF THE franchise agreement; 1
and 2
(iii) the business experience AND OPERATIONAL PRACTICES of the 3
franchisor or its representative. 4
(b) The intent of this subtitle is to: 5
(1) give each prospective franchisee necessary information about any 6
franchise offer; 7
(2) [prohibit the sale of franchises if the sale ] PROMOTE HONESTY , 8
TRANSPARENCY, AND ACCOUNTABILITY, AND FAIR DEALING IN THE OFFER AND 9
SALE OF FRANCHISES; 10
(3) PREVENT PRACTICES TH AT would [lead to ] RESULT IN fraud or a 11
likelihood that the franchisor’s representations would not be fulfilled; [and] 12
[(3)] (4) protect the franchisor–franchisee relationship; AND 13
(5) SUPPORT THE CONTINUE D GROWTH OF FRANCHIS ING AS A 14
BUSINESS MODEL IN THE STATE. 15
14–210. 16
(a) (1) Whenever the Commissioner finds that a person has violated or is about 17
to violate this subtitle or a regulation adopted or order passed under it, the Commissioner 18
may order the person to cease and desist from the further offer to sell or sale of the franchise 19
until the offer or sale complies with this subtitle. 20
(2) After passage of a cease and desist order, the alleged violator may 21
submit to the Commissioner a written request for a hearing. 22
(3) The hearing shall begin: 23
(i) within 15 business days after the Commissioner receives the 24
request for a hearing; or 25
(ii) at a later date, with the consent of the alleged violator. 26
(4) Unless there is a timely hearing, the cease and desist order is rescinded. 27
(b) (1) Whenever the Commissioner finds that a person has violated or is about 28
to violate this subtitle or a regulation adopted or order passed under it, the Commissioner 29
may sue in the circuit court to enjoin the violation or enforce this subtitle or the regulation 30
or order. 31
4 HOUSE BILL 730
(2) The court shall: 1
(i) determine if a violation of this subtitle has been or is about to be 2
committed; and 3
(ii) if so, pass any order the court considers necessary to prevent the 4
violation or remove the effects of the violation and prevent it from continuing or being 5
renewed in the future. 6
(3) The court may exercise all equitable powers necessary for this purpose, 7
including: 8
(i) injunction; 9
(ii) revocation, forfeiture, or suspension of the charter authority or 10
privileges of a business organization operating under the laws of the State; 11
(iii) dissolution of a corporation or association organized under the 12
laws of the State; 13
(iv) suspension or termination of the right of a corporation or 14
association organized under the laws of another state or country to do business in the State; 15
(v) restitution; 16
(vi) restraining order; 17
(vii) award of damages to be paid by a franchisor or subfranchisor to 18
a person injured by a violation of this subtitle; and 19
(viii) appointment of a receiver or conservator. 20
(4) The court may not require the Commissioner to post bond. 21
(c) The Commissioner may not exercise a power under this section more than [3] 22
5 years after the violation occurs. 23
14–214. 24
(a) Except as otherwise provided in this subtitle, a person must register the offer 25
of a franchise with the Commissioner before the person offers to sell, through 26
advertisement or otherwise, or sells the franchise in the State. 27
(b) The registration requirement of this section does not apply to: 28
HOUSE BILL 730 5
(1) a transaction by an executor, administrator, sheriff, receiver, trustee in 1
bankruptcy, guardian, or conservator; 2
(2) an offer to sell or sale of a franchise that is substantially similar to a 3
franchise already owned by the offeree or buyer; and 4
(3) any other transaction that the Commissioner exempts by regulation 5
because: 6
(i) the transaction is not within the purpose of this subtitle; and 7
(ii) the registration of the transaction is not necessary or appropriate 8
in the public interest or for the protection of investors. 9
(c) (1) The registration requirement of this section does not apply to the offer 10
to sell or sale of a franchise by a franchisee for the franchisee’s own account, or the offer to 11
sell or sale of the entire area franchise owned by a subfranchisor for the subfranchisor’s 12
own account. 13
(2) A sale is not effected by or through a franchisor merely because a 14
franchisor has a right to approve or disapprove a different franchisee. 15
(d) (1) The Commissioner may require by regulation that a franchisor or 16
subfranchisor who claims under subsection (b)(3) of this section to be exempt from the 17
registration requirements of this section: 18
(i) file with the Commissioner a notice of claim of exemption in the 19
form that the Commissioner requires; and 20
(ii) pay a fee of $250. 21
(2) The franchisor or subfranchisor shall sign and verify the notice of claim 22
of exemption. 23
(E) THE COMMISSIONER SHALL RE QUIRE THE FRANCHISOR NET EQUITY 24
AMOUNTS SET FORTH IN THE FRANCHISE REGIST RATION EXEMPTION UND ER 25
COMAR 02.02.08.10D.1 TO ACCOUNT FOR INFLA TION OR DEFLATION BA SED ON 26
THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS BY THE U.S. 27
DEPARTMENT OF LABOR. 28
14–227. 29
(A) THIS SECTION APPLIES ONLY TO: 30
(1) A FRANCHISEE OR FRANCHISOR WHO IS A RESIDENT OF THE 31
STATE; OR 32
6 HOUSE BILL 730
(2) A FRANCHISED BUSINESS THAT OPERATES OR WILL BE OPERATED 1
IN THE STATE. 2
[(a)] (B) (1) A person who sells or grants a franchise is civilly liable to the 3
person who buys or is granted a franchise if the person who sells or grants a franchise offers 4
to sell or sells a franchise: 5
(i) without the offer of the franchise being registered under this 6
subtitle; or 7
(ii) by means of an untrue statement of a material fact or any 8
omission to state a material fact necessary in order to make the statements made, in light 9
of the circumstances under which they are made, not misleading, if the person who buys or 10
is granted a franchise does not know of the untruth or omission. 11
(2) In determining liability under this s ubsection, the person who sells or 12
grants a franchise has the burden of proving that the person who sells or grants a franchise 13
did not know and, in the exercise of reasonable care, could not have known of the untruth 14
or omission. 15
[(b)] (C) The person wh o buys or is granted a franchise may sue under this 16
section to recover damages sustained by the grant of the franchise. 17
[(c)] (D) A court may order the person who sells or grants a franchise to: 18
(1) rescind the franchise; and 19
(2) make restitution to the person who buys or is granted a franchise. 20
[(d)] (E) (1) Joint and several liability under this section extends to: 21
(i) each person who directly or indirectly controls a person liable 22
under this section; 23
(ii) each partner in a partnership liable under this section; 24
(iii) each principal officer or director of a corporation liable under this 25
section; 26
(iv) each other person that has a similar status or performs similar 27
functions as a person liable under this section; and 28
(v) each em ployee of a person liable under this section, if the 29
employee materially aids in the act or transaction that is a violation under this subtitle. 30
HOUSE BILL 730 7
(2) However, liability under this subsection does not extend to a person 1
who did not have knowledge of or reasonable grounds to believe in the existence of the facts 2
by which the liability is alleged to exist. 3
[(e)] (F) An action under this section must be brought within [3] THE EARLIER 4
OF: 5
(1) 5 4 years after the grant of the franchise; OR 6
(2) THE LATER OF: 7
(I) 3 YEARS AFTER THE GRANT OF THE FRANCHISE; OR 8
(II) 2 YEARS AFTER THE DATE OF THE INITIAL COMMENCEMENT 9
OF OPERATIONS OF THE FRANCHISE THE FRANCHISE OPENED TO THE PUBLIC. 10
14–233. 11
(A) ALL FRANCHISEES HAVE THE RIGHT TO JOIN A TRADE ASSOCIATION 12
CONSISTING OF OTHER FRANCHISEES OF THE S AME FRANCHISE AND TO 13
PARTICIPATE IN THE TRADE ASSOCIATION FOR ANY LAWFUL PURPOSE. 14
(B) A FRANCHISOR MAY NOT , DIRECTLY OR INDIRECT LY, THROUGH ANY 15
OFFICER, AGENT, OR EMPLOYEE: 16
(1) RESTRICT OR INHIBIT THE RIGHT OF A FRANCHI SEE TO JOIN A 17
TRADE ASSOCIATION CO NSISTING OF OTHER FR ANCHISEES OF THE SAM E 18
FRANCHISE; OR 19
(2) PROHIBIT THE RIGHT O F FREE ASSOCIATION A MONG 20
FRANCHISEES FOR ANY LAWFUL PURPOSE. 21
(B) (C) (1) A PERSON WHO VIOLATES SUBSECTION (A) (B) OF THIS 22
SECTION MAY BE SUED IN CIRCUIT COURT FOR: 23
(I) TEMPORARY OR PERMANENT INJUNCTIVE RELIEF; 24
(II) DAMAGES, IF ANY; AND 25
(III) COSTS OF THE SUIT , INCLUDING ANY REASON ABLE 26
ATTORNEY’S FEES. 27
(2) THE INJUNCTIVE RELIEF MAY BE SOUGHT FROM T HE CIRCUIT 28
COURT IN THE COUNTY WHERE THE INDIVIDUAL WHO IS AL LEGED TO BE IN 29
8 HOUSE BILL 730
VIOLATION OF SUBSECT ION (A) OF THIS SECTION FRANCHISEE RESIDES OR THE 1
FRANCHISE AFFECTED BY THE VIOLATION CONDUCTS BUSINESS. 2
(3) WHEN S EEKING AN INJUNCTION UNDER THIS SECTION , THE 3
PLAINTIFF MAY NOT BE REQUIRED TO ALLEGE O R PROVE ACTUAL DAMAG ES 4
SUFFERED TO OBTAIN INJUNCTIVE RELIEF. 5
(4) AN ACTION UNDER THIS SUBSECTION MUST BE BROUGHT WITHIN 6
THE EARLIER OF: 7
(I) 2 YEARS AFTER THE ALLEGED VIOLATION OCCURRED; OR 8
(II) 1 YEAR AFTER THE DISCO VERY BY THE PLAINTIF F OF THE 9
FACTS OF THE ALLEGED VIOLATION. 10
[14–233.] 14–234. 11
This subtitle is the Maryland Franchise Registration and Disclosure Law. 12
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 13
as follows: 14
Article – Business Regulation 15
14–219.1. 16
(A) IN THIS SECTION , “PROGRAM” MEANS THE MARYLAND FRANCHISE 17
DISCLOSURE DOCUMENT RENEWAL FAST–TRACK REVIEW PILOT PROGRAM. 18
(B) (1) THERE IS A MARYLAND FRANCHISE DISCLOSURE DOCUMENT 19
RENEWAL FAST–TRACK REVIEW PILOT PROGRAM. 20
(2) THE COMMISSIONER SHALL ADMINISTER THE PROGRAM. 21
(C) (1) THE COMMISSIONER SHALL ES TABLISH A STANDARD F OR THE 22
REVIEW AND APPROVAL OF INCOMPLETE FRANCH ISE DISCLOSURE DOCUM ENTS, 23
INCLUDING FRANCHISE DISCLOSURE DOCUMENTS THAT WERE NOT SUBMITTED FOR 24
PARTICIPATION IN THE PROGRAM. 25
(2) THE COMMISSIONER MAY USE A TECHNOLOGY SYSTEM TO ASSIST 26
THE REVIEW OF DOCUMENTS AS REQUIRED UNDER THIS SECTION. 27
(D) THE COMMISSIONER SHALL ADOPT REGULATIONS TO CARRY OUT THIS 28
SECTION, INCLUDING REGULATION S ESTABLISHING REQUI REMENTS AND 29
HOUSE BILL 730 9
PROCEDURES FOR THE S UBMISSION AND APPROV AL OF FRANCHISE DISC LOSURE 1
DOCUMENTS. 2
(E) ON OR BEFORE SEPTEMBER 30, 2031, THE COMMISSIONER SHALL, IN 3
ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT ARTICLE, SUBMIT TO 4
THE SENATE FINANCE COMMITTEE AND THE HOUSE ECONOMIC MATTERS 5
COMMITTEE AND POST ON THE WEBSITE OF THE OFFICE OF THE ATTORNEY 6
GENERAL A REPORT THAT INCLUDES: 7
(1) THE NUMBER OF FRANCH ISE DISCLOSURE DOCUM ENTS 8
SUBMITTED BY FRANCHISORS UNDER THE PROGRAM; 9
(2) THE NUMBER OF FRANCH ISORS THAT PARTICIPA TED IN THE 10
PROGRAM; 11
(3) THE AMOUNT OF TIME REQUIRED TO ADMINISTER THE PROGRAM; 12
(3) (4) AN ANALYSIS OF WHETH ER THERE WAS ANY IMP ACT ON 13
FRANCHISE DISCLOSURE DOCUMENTS SUBMITTED OUTSIDE THE PROGRAM, 14
INCLUDING THE AMOUNT OF TIME REQUIRED FOR THE ANALYSIS OF FRAN CHISE 15
DISCLOSURE DOCUMENTS THAT WERE REJECTED; 16
(4) (5) A DESCRIPTION OF PRO GRAMS IN OTHER STATE S THAT 17
ADDRESS EXEMPTIONS FOR CERTAIN ESTABLISHED FRANCHISORS, INCLUDING THE 18
ELIGIBILITY STANDARDS BY WHICH T HE APPROPRIATE AUTHO RITY MAKES 19
DETERMINATIONS REGARDING ESTABLISHED FRANCHISORS; 20
(5) (6) AN ANALYSIS OF WHETH ER THE PROGRAM EFFECTS 21
CONSUMER PROTECTION, AND THE EXTENT TO WH ICH, THE PROGRAM MAINTAINS 22
OR ENHANCES THE PROT ECTIONS AFFORDED TO PROSPECT IVE FRANCHISEES 23
UNDER THE MARYLAND FRANCHISE REGISTRATION AND DISCLOSURE LAW, 24
INCLUDING: 25
(I) AN EVALUATION OF WHE THER THE EXPEDITED R EVIEW OF 26
FRANCHISOR REGISTRAT ION APPLICATIONS UND ER THE PROGRAM DIMINISHES 27
THE EFFICACY OF THE DISCLOSURE REQUIREMENTS AND REVIEW STANDARDS; AND 28
(II) A DESCRIPTION OF ANY FRANCHISEE PROTECTIO N 29
BENEFITS THAT MAY RESULT FROM A MORE TIMELY AND EFFICIENT REGISTRATION 30
PROCESS; AND 31
(6) (7) INFORMATION REGARDIN G THE EFFICIENCY OF THE 32
REVIEW OF FRANCHISE DISCLOSURE DOCUMENTS SUBMITTED FOR PARTICIPATION 33
IN THE PROGRAM AND FRANCHISE DISCLOSURE DOCUMENTS THAT WERE NOT 34
10 HOUSE BILL 730
SUBMITTED FOR PARTIC IPATION IN THE PROGRAM, INCLUDING INFORMATIO N 1
CONCERNING: 2
(I) COMMENTARY PERIODS; 3
(II) AMENDMENT PERIODS; 4
(III) THE TIME FOR COMPLET ION OF SUBMISSION AN D REVIEW 5
OF FRANCHISE DISCLOSURE DOCUMENTS; 6
(IV) THE NUMBER OF REVIEWERS; AND 7
(V) THE AVERAGE NUMBER O F FRANCHISE DISCLOSU RE 8
DOCUMENTS SUBMITTED EACH YEAR. 9
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 10
October 1, 2026. Section 2 of this Act shall remain effective for a period of 6 years and, at 11
the end of September 30, 2032, Section 2 of this Act, with no further action required by the 12
General Assembly, shall be abrogated and of no further force and effect. 13
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.