If you are a franchisor looking to sell franchises in Puerto Rico, understanding the state’s compliance requirements is essential to avoiding legal liability and regulatory penalties. Puerto Rico does not require state-level franchise registration or filing. The Puerto Rico Dealers Act (Law 75 of 1964) / Law 21 of 1990 (10 L.P.R.A. 278 et seq. (Law 75); 10 L.P.R.A. 279 et seq. (Law 21)) governs franchise relationships in the state. At Lopes Law LLC, we help franchisors navigate compliance requirements in all 50 states, including Puerto Rico.

This guide covers everything franchisors need to know about Puerto Rico franchise compliance: filing requirements, exemptions, relationship law obligations, advertising restrictions, penalties for non-compliance, and practical steps for maintaining compliance. Last updated: March 12, 2026.

What Are the Filing Requirements for Franchisors in Puerto Rico?

Puerto Rico does not require franchisors to register their FDD or file any paperwork with the state before offering or selling franchises. The only requirement is compliance with the federal FTC Franchise Rule, 16 C.F.R. Part 436.

Does Puerto Rico Have a Franchise Relationship Law That Affects Franchisors?

Yes. Puerto Rico has a franchise relationship law that imposes specific obligations on franchisors. Puerto Rico has Law 75 (Dealers Act) providing strong franchisee/dealer protections including just cause termination, 5+ years of lost profits as damages. Law 21 protects sales representatives. No franchise registration required but FTC Rule applies as federal territory. Royalties subject to ~29% withholding tax.

Franchisors must ensure their franchise agreements and operational practices comply with this relationship statute. Violations can result in civil liability, damages, and injunctive relief.

What Federal Requirements Apply to Franchisors in Puerto Rico?

Regardless of Puerto Rico’s state-level requirements, all franchisors must comply with the FTC Franchise Rule, 16 C.F.R. Part 436. Key requirements include:

• FDD delivery: Provide the FDD at least 14 calendar days before the franchisee signs any agreement or pays any money.
• 23-item FDD: The FDD must contain all 23 required items including audited financial statements.
• Annual updates: Update the FDD within 120 days of fiscal year end.
• Item 19 compliance: Any financial performance representation must appear in Item 19. No verbal or informal earnings claims outside the FDD.
• No misrepresentations: The FTC Rule prohibits franchisors from making any claim or representation that is inconsistent with the FDD.

What Are the Advertising Restrictions for Franchisors in Puerto Rico?

In Puerto Rico, franchise advertising must comply with the FTC Rule and Puerto Rico’s general advertising and consumer protection laws. The FTC Rule prohibits franchisors from making claims in advertising that are inconsistent with the FDD.

Key advertising compliance rules for franchisors in Puerto Rico:

• Do not make financial performance representations in advertising unless they are substantiated in Item 19 of the FDD.
• Do not make guarantees about franchisee income or success.
• Ensure all advertising is consistent with the disclosures in the FDD.
• If the state’s business opportunity law applies, ensure compliance with those specific requirements.

What Are the Penalties for Non-Compliance in Puerto Rico?

Franchisors who fail to comply with applicable franchise laws in Puerto Rico may face:

• FTC enforcement: The FTC can bring enforcement actions for violations of the Franchise Rule, including civil penalties, injunctive relief, and rescission of franchise agreements.
• Private right of action: Under the Puerto Rico Dealers Act (Law 75 of 1964) / Law 21 of 1990, franchisees may have a private right of action for violations of the state franchise law.
• Rescission: If a franchisor fails to provide the required FDD within the 14-day waiting period, the franchisee may have grounds to rescind the franchise agreement and recover their investment.

What Exemptions and Exclusions Apply in Puerto Rico?

The FTC Franchise Rule contains several exemptions that may apply to franchise sales in Puerto Rico:

• Large franchise buyer exemption: Sales to buyers with a net worth of at least $6,150,000 (adjusted periodically) and at least five years of business experience may be exempt.
• Insider exemption: Sales to officers, directors, or managers of the franchisor who have been in that position for at least two years may be exempt.
• Large initial investment exemption: Franchise sales where the total initial investment exceeds $1,230,500 (adjusted periodically) may be exempt, provided the franchisee signs a specific acknowledgment.

How Should Franchisors Handle Renewal and Amendment Filings in Puerto Rico?

Because Puerto Rico does not require franchise registration, there are no state-level renewal or amendment filing requirements. Franchisors must, however, keep their FDD current under the FTC Rule, including updating it within 120 days of fiscal year end and filing interim amendments for material changes.

Compliance Checklist for Franchisors Entering Puerto Rico

• Ensure FDD is current and compliant with the FTC Franchise Rule
• Confirm no state filing is required (non-registration state)
• Review franchise agreement for compliance with Puerto Rico Dealers Act (Law 75 of 1964) / Law 21 of 1990
• Verify all advertising materials are consistent with FDD disclosures
• Ensure 14-day FDD delivery timing is documented
• Maintain records of all prospective franchisee disclosures and receipts
• Calendar annual FDD update deadline (120 days after fiscal year end)

For a complete overview of franchise registration requirements across all states, see our guide to franchise registration states.

If you are a franchisor who needs assistance with FDD preparation or state compliance, see our post on how much a franchise lawyer costs for information about our flat-fee pricing. If you are experiencing franchise disputes, consider our franchise exit audit services.

For more on franchise agreement review, see our guide on franchise agreement red flags your lawyer should catch. For a detailed FDD review walkthrough, see what an FDD review includes. For franchise lawyer pricing, see how much does a franchise lawyer cost.

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