Thinking Outside the State: The Dormant Commerce Clause and Its Impact on State Relationship Laws
Twenty-four states have enacted at least one statute regulating the relationship between franchisors and franchisees (State Relationship Laws).1 Suchlaws are intended to protect franchisees because the investments that theymake in a specific franchise or product line make them particularly vulnerable to the franchisor. When a franchisee makes an investment in a particularbrand by establishing a physical presence in a state for the purpose of conducting local business and servicing local citizens, the scope and applicationof the State Relationship Law is relatively straightforward.