Kentucky

Registration or Filing Required? Yes, Filing
Business Opportunity Laws? Yes

Kentucky is a franchise filing state, and franchisors are exempt from registration if their business meets the federal definition of a franchise. They can file for exemption by submitting a one-time application certifying that they meet the FTC’s definition of a franchise. More information on business registration can be found on the Kentucky Attorney General’s Website.

How Do I Apply for Exemption?

The Kentucky Business Opportunity Act (Section 801), defines a business opportunity as a sale of goods or services exceeding $500 in which the goods or services enable the buyer to start a business, and the seller represents that the buyer will earn or is likely to earn a profit, and:

1. The seller knows the market and demand will allow buyer to earn profit,
2. The seller will provide locations or assistance in finding locations for the business, or
3. The seller represents there is a guaranteed market, or the seller will buy back products made by buyer using items sold by seller

Business opportunities must be registered in the state prior to offering or selling said opportunities. However, the Act specifically exempts businesses that qualify as a franchise under the FTC’s rules from the registration requirements. In order to rely on the exemption, a franchisor must mail a copy of its FDD and a completed Affidavit of Business Opportunity Exemption to:

Office of the Attorney General
Consumer Protection Division
1024 Capital Center Drive
Frankfort, KY 40601

This is a one-time filing and does not need to be done annually, but franchisors must submit an update if there is a change in their address. There is no fee for filing an exemption.

What is Required Under the Business Opportunity Act?

If a business opportunity does not qualify for an exemption, it must comply with the terms of the Act. First, the business must register with the Attorney General’s Office, and can do so by submitting a Business Opportunity Annual Registration Statement, along with the required $150 fee. In addition to that, business opportunities are required to furnish a bond or certificate of deposit in an amount of at least $75,000. Said bond or CD must be evidenced by submitting the required bond form or assignment of certificate of deposit. This registration must be renewed annually for $50. If any information in the registration changes, the business opportunity must submit an update along with the $25 update fee.

In addition to registration, the Act also makes business opportunities liable for any false, misleading or deceptive representations they make to potential buyers. Business opportunities are also prohibited from making any representations regarding the potential for sales, income or profits unless they are based on actual earnings made by other purchasers of the business opportunity.

Fun Fact: As one might expect, there are approximately twice as many bourbon barrels as there are people in Kentucky!