Iowa

Registration or Filing Required? No
Business Opportunity Laws? Yes

Iowa is not a franchise registration state nor a franchise filing state. So, you may offer or sell your franchise without registering or filing your Franchise Disclosure Document (“FDD”) with the state, provided that you are compliant with the Federal Franchise Rule.

Does Iowa Have Specific Franchise Laws?

While not franchise specific, Iowa does have a Business Opportunity Law, which requires sellers of business opportunities to make written disclosures to prospective buyers before selling a business opportunity. Iowa defines a business opportunity as a contract where the buyer pays an initial payment of greater than $500, and the seller will provide goods or services for the purpose of enabling the purchaser to start the business, and represents one of the following:

1. Seller will provide locations or assist buyer in finding locations for vending machines, racks or devices;
2. Seller will provide or assist buyer in finding outlets or accounts for the buyer’s products or services;
3. Seller will buy any products made by buyer;
4. Buyer will derive income exceeding purchase price;
5. Seller will refund some/all money or buy back some/all products if buyer is not satisfied; or
6. Seller will provide marketing plan.

The law applies to any business opportunities where the offer is made or accepted in the state, where the buyer is a resident of the state, or where the business will be operated in the state. Business opportunities subject to the law are required to provide disclosures documents to potential buyers at least 10 business days before the purchase. Said disclosure documents must also be accompanied by a statement that the business opportunity does not have the approval, recommendation, or endorsement of the state of Iowa.

Franchises are exempt from these requirements provided by the business opportunity law, though they are essentially required to do the same by federal law anyway. As long as franchisors provide a potential franchisee with their FDD during their first face-to-face meeting or 14 days prior to the date of sale, whichever is sooner, they do not have to comply with other provisions of the business opportunity law. Franchisors should be careful though, as the law appears to be written with the intent of describing an in-person meeting, but in this age of video conferencing, it’s worth keeping in mind what might be considered a “face-to-face” meeting.

Fun Fact: If you’ve ever tried the butterfly stroke, you know it is not the most natural way to swim. It makes you wonder what was going through the mind of Dave Armbruster when he started doing it at the University of Iowa in 1934.