Franchise law includes the various sources of state and federal law (statutes, rules, regulations, contracts) that govern the registration, offer, and sale of franchises, and the relationship between franchisors and franchisees—including any personal guarantee of the franchisee’s obligations.

At the federal level, the Federal Trade Commission (FTC) regulates franchising under the FTC Franchise Rule—which (1) requires certain disclosures to potential franchisees before signing a franchise agreement or contract and (2) prohibits unfair and deceptive trade practices. And at the state level, some states have passed franchise laws that impose state registration obligations, regulate the offer and sale of franchises, and prohibit certain franchise agreement provisions.

Under the FTC Franchise Rule, a business or licensing arrangement will be regulated as a franchise if it has three elements: (1) the franchisor grants the franchisee a right to use the franchisor's trademark; (2) the franchisor exerts or has the authority to exert a significant degree of control or assistance over the franchisee's method of operation; and (3) the franchisee pays the franchisor a fee of at least $570. Even if the parties to a contract call it a licensing agreement, a distribution agreement, or explicitly state that it is not a franchise arrangement, if these three elements are present, the FTC Franchise Rule and other federal laws, regulations, and FTC rules will apply.

The FTC Business Opportunity Rule and state statutes governing the marketing of business opportunities and the related sale or lease of products, equipment, supplies, or services may also apply to franchises and the relationship between franchisors and franchisees.

In Idaho, franchise law is primarily governed by federal regulations, as Idaho does not have specific franchise statutes. The Federal Trade Commission (FTC) Franchise Rule is the main regulatory framework, requiring franchisors to provide potential franchisees with a Franchise Disclosure Document (FDD) before any agreement is signed. This document must contain detailed information about the franchise, including fees, the legal and financial history of the franchisor, and the rights and obligations of both parties. The FTC Franchise Rule also aims to prevent unfair and deceptive trade practices. A business arrangement is considered a franchise under federal law if it involves the right to use a trademark, significant control or assistance over operations, and a fee of at least $570. Additionally, the FTC Business Opportunity Rule may apply, which covers the marketing of business opportunities and the sale or lease of related products or services. While Idaho does not have specific franchise laws, franchises in the state must comply with these federal regulations, and any personal guarantees by franchisees would be governed by the contractual agreements they enter into with franchisors.