What is the NASAA Model Franchise Broker Registration Act?

The NASAA Model Franchise Broker Registration Act is a model law adopted by the North American Securities Administrators Association on May 4, 2026, after two years of stakeholder input. It provides a comprehensive template that U.S. states can adopt to regulate franchise brokers, including mandatory registration, annual renewals, prescribed disclosures, fee requirements, prohibitions on false earnings claims, and recordkeeping obligations. It is not itself a law—states must choose to adopt it.

Is the NASAA Model Franchise Broker Registration Act currently law?

No. The Model Act is a nonbinding template. No state has enacted it yet as of June 2026. Currently, only California, New York, and Washington have franchise broker registration requirements. States may adopt the Model Act in full, in part, or with modifications. However, the IFA endorsed the final model, and several states are expected to consider legislation modeled on it.

Who is considered a franchise broker under the NASAA Model Act?

The Model Act defines a franchise broker as any person who directly or indirectly engages in the business of offering or selling a franchise and receives (or is promised) a fee, commission, or other consideration from a franchisor, subfranchisor, or franchisee. This broad definition may encompass franchise sales organizations, broker networks, consultants, advisors, business coaches, referral sources, and lead generators—not just traditional brokers. The actual conduct, not the job title, determines coverage.

What should franchise buyers look for when dealing with a franchise broker?

Buyers should ask whether the broker is registered in states that require it (currently CA, NY, WA), request the broker's written disclosure statement describing compensation and litigation history, verify which franchisor is paying the broker's commission, independently review the FDD rather than relying solely on broker representations, and check the FTC franchise compliance database and state AG enforcement records for any disciplinary history.

NASAA Model Franchise Broker Registration Act: What It Means for Franchise Buyers and Sellers in 2026

FranchiseIQ Research•June 15, 2026•8 min read

Quick Summary

• NASAA adopted the Model Franchise Broker Registration Act on May 4, 2026
• It is a template—not law. States must choose to adopt it.
• Currently only California, New York, and Washington require broker registration
• Key provisions: mandatory registration, pre-sale disclosures, recordkeeping, enforcement authority
• The IFA endorsed the final model, signaling industry support
• Broad definition of "franchise broker" may capture consultants, coaches, and lead generators

Background: The Franchise Broker Regulatory Gap

For decades, franchise brokers—third-party intermediaries who match prospective franchisees with franchisors—operated in a regulatory gray zone. The Federal Trade Commission's Franchise Rule requires franchisors to provide a Franchise Disclosure Document (FDD) to prospective buyers, but it does not directly regulate the brokers who often guide the sales process. Only three states (California, New York, and Washington) had independent broker registration requirements, and enforcement was inconsistent.

This gap drew increasing scrutiny as franchise broker networks expanded. High-profile enforcement actions—including the FTC's $17 million settlement with Xponential Fitness and the NY Attorney General's $3.97 million settlement under the New York Franchise Sales Act—highlighted how misleading broker representations can harm buyers. The franchise enforcement tracker documents these and other regulatory actions.

Key Provisions of the Model Act

The Model Act creates a comprehensive regulatory framework that states can adopt wholesale or modify. Here are the core provisions most relevant to franchisors, brokers, and buyers:

Provision	What It Requires	Who It Affects
Mandatory Registration	Franchise brokers and their representatives must register with state regulators and renew annually before engaging in franchise sales activity.	All third-party brokers, sales organizations, and potentially consultants and lead generators
Pre-Sale Disclosure	Brokers must provide a disclosure statement to prospective franchisees before any communication about a specific opportunity, covering compensation, material litigation, and enforcement history.	Brokers and franchisors (who must ensure their agents comply)
Prohibition on Unregistered Brokers	Franchisors and subfranchisors may not use the services of unregistered franchise brokers in adopting states.	Franchisors (creates due diligence obligation to verify broker registration)
Education & Testing	State directors may impose pre-registration education, examination, and continuing education requirements.	Individual brokers and broker representatives
Recordkeeping	Registered brokers must maintain complete books and records related to offers and sales for at least five calendar years, even after ceasing operations.	All registered brokers and their representatives
Enforcement Authority	State regulators may deny, suspend, or revoke registrations for misconduct, including broker insolvency.	State regulators administering the Act

Who Is a "Franchise Broker" Under the Model Act?

The Model Act uses a broad functional definition. A franchise broker is anyone who "directly or indirectly engages in the business of the offer or sale of a franchise and receives, or is promised, a fee, commission, or other form of consideration." The term "other consideration" is intentionally expansive—it includes equity in a franchisor, buy-out rights, and shares of ongoing royalties, not just cash commissions.

NASAA's prefatory notes identify seven activities that may trigger registration:

Locating prospective franchisees
Acting as an intermediary between prospects and franchisors
Acting as an intermediary between franchisors and entities that offer or sell franchises
Evaluating the qualifications of prospective franchisees
Assessing the suitability of prospects for particular franchise opportunities
Managing franchise prospects for franchisors
Providing prospective franchisees information about franchise offerings

Importantly, it is the actual conduct, not the job title, that determines coverage. The Act explicitly states that entities may call themselves franchise brokers, franchise sales organizations, broker networks, advisors, business coaches, consultants, lead generators, referral sources—or any other name—and still be subject to registration.

⚠️ Ambiguity Alert: "Indirect" Participation

The Act defines a broker as someone who "directly or indirectly" engages in franchise sales, but does not define "indirect." This creates uncertainty for franchise-adjacent businesses such as advertising platforms, lead generation services, and franchise listing websites. Until states adopt clarifying guidance or case law develops, these entities should monitor whether their activities cross the line from advertising into "effecting" a sale.

Current State-by-State Broker Registration Landscape

Before the NASAA Model Act, franchise broker regulation was a patchwork. Here is the current landscape as of June 2026:

State	Broker Registration Required?	Key Details
California	Yes	SB 919 (2025) strengthened broker disclosure; IFA supported. Effective Jan 1, 2026.
New York	Yes	NY Franchise Sales Act; NY AG active enforcer ($3.97M Xponential settlement)
Washington	Yes	Long-standing broker registration requirement under WA Franchise Act
Maryland	Franchisor disclosure only	Franchisors must disclose broker identities, but brokers need not independently register
Minnesota	Franchisor disclosure only	Similar pattern—disclose brokers in FDD, no independent registration
All other states	No requirement	No franchise broker registration or disclosure rules

For a comprehensive breakdown of each state's franchise registration and broker rules, see our state franchise broker registration guide.

Industry Response: IFA Endorsement

The International Franchise Association (IFA) endorsed the final Model Act—a notable shift from the franchise industry's historical resistance to broker regulation. IFA General Counsel Sarah Davies called it "a huge step forward in shaping fair and effective franchise regulatory policy," citing alignment with IFA's Responsible Franchising Principles.

The IFA specifically praised provisions authorizing state regulators to establish examination and continuing education requirements for franchise brokers. The IFA's August 2025 comment letter to NASAA proposed clarifying amendments to better reflect the landscape of third-party franchise sellers—many of which were incorporated into the final model.

This endorsement is significant because it signals to state legislators that the regulated industry itself supports the framework, which may accelerate state-level adoption.

FDD Diligence Implications for Franchise Buyers

Whether or not your state has adopted the Model Act, the increased regulatory focus on franchise brokers means buyers should apply extra scrutiny when a broker is involved in the sales process. Here are the FDD diligence questions that matter most:

FDD Item	What to Check Regarding Brokers
Item 2 (Business Experience)	Identify the broker's principals and their prior franchise sales experience. Look for patterns of failed systems.
Item 3 (Litigation)	Check whether the broker or its principals have been named in franchise litigation. Cross-reference with PACER and state AG databases.
Item 4 (Bankruptcy)	A broker with prior bankruptcies may signal financial instability or a pattern of failed ventures.
Item 8 (Fees)	The FDD may not disclose broker commissions directly. Ask the franchisor: what is the broker being paid, and by whom?
Item 11 (Franchisor Obligations)	Check what the franchisor says about its use of brokers. Does it vet them? Does it require registration in CA/NY/WA?
Item 20 (Outlets & Transfers)	High franchisee turnover may indicate that broker-driven sales are outpacing operator fit. Compare closure rates against broker-heavy systems.

Buyer's Broker Due Diligence Checklist

Ask for the broker's disclosure statement. If they cannot or will not provide one, treat that as a red flag—even in states that do not yet require it.
Verify registration in CA, NY, and WA if the broker operates in or solicits residents of those states. Check the state regulator's online database.
Ask who pays the broker's commission—the franchisor, the franchisee, or both. Understand that the broker's financial incentive is aligned with the paying party.
Check enforcement history. Search the FTC franchise compliance database, the relevant state AG's office, and online franchise forums for complaints.
Do not rely solely on broker representations about the FDD. Read the full FDD yourself, especially Items 3, 5, 6, 7, 19, and 20. A broker is not your fiduciary.
Ask whether the broker is an "exclusive" agent of the franchisor or shops multiple brands. Exclusive brokers may present a curated (not comprehensive) set of options.

🚩 Red Flags When Working with a Franchise Broker

• Broker pressures you to sign before the 14-day FDD review window
• Broker makes earnings claims not found in FDD Item 19
• Broker discourages you from speaking with existing franchisees
• Broker is not registered in CA/NY/WA despite soliciting there
• Broker has prior franchise-related litigation or regulatory action
• Broker cannot clearly explain their compensation arrangement

What Happens Next: State Adoption Watch

The Model Act is now available for state adoption. Key states to watch include:

Maryland — Already has a strong franchise registration regime (one of the 14 registration states) and has been active in franchise enforcement. A natural early adopter.
Virginia — Has pending franchise non-compete legislation (July 1, 2026) and a franchise registration act. May consider broker registration as part of broader franchise reform.
Illinois — As a major franchise registration state with an active AG, Illinois is a likely candidate to consider the Model Act.
California — Already strengthened broker rules with SB 919 (effective Jan 1, 2026). May align its existing regime with the NASAA model for consistency.

The pace of adoption will depend on state legislative calendars, industry lobbying, and whether high-profile broker-related franchise failures continue to generate enforcement headlines. We will update this page as states introduce legislation.

How This Fits the Broader Regulatory Trend

The NASAA Model Act is part of a wave of 2026 franchise regulatory developments:

The American Franchise Act (H.R. 5267) with 116 cosponsors, though stalled in committee
The DOL Joint Employer NPRM (April 2026), which would redefine franchisor liability for franchisee employees via executive rulemaking
State-level franchise reform in Virginia (non-compete ban, July 1), Maryland (reform act signed), California (broker regulation via SB 919), and Arizona (committee hearings)
The SBA franchise directory certification cliff on June 30, 2026

Together, these developments signal a structural shift toward greater franchise transparency, stronger broker oversight, and expanded franchisee protections. For buyers, that is a net positive. For franchisors reliant on aggressive broker networks, it is a compliance wake-up call.

Sources

NASAA Model Franchise Broker Registration Act text (adopted May 4, 2026)
Miller Nash LLP, "NASAA Surprises Franchise Industry by Adopting Model Franchise Broker Registration Act" (May 14, 2026)
UB Greensfelder LLP, "NASAA Adopts Model Act Targeting Franchise Broker Regulation" (May 7, 2026)
International Franchise Association, "IFA Applauds NASAA Adoption of Model Franchise Broker Registration Act" (May 2026)
InvestmentNews, "NASAA Advances Sweeping Reforms on Advisor Advertising and Franchise Broker Oversight" (May 2026)