The American Association of Franchisees and Dealers (AAFD) is pleased to announce that on April 13, 2026, Virginia Governor Abigail Spanberger signed important pro-franchisee legislation into law. The identical measures, House Bill 69, sponsored by Dan Helmer, and Senate Bill 240, sponsored by Christopher Head, amend Virginia’s Retail Franchising Act to prohibit post termination noncompete clauses in franchise agreements and require that franchise agreements offered or entered into in Virginia be governed by the laws of the Commonwealth of Virginia.
The prohibition on post termination noncompete clauses marks a major victory for franchisees. These provisions have long been used by many franchisors as leverage during renewal negotiations, often forcing franchisees to sign materially different agreements in order to continue operating. In many cases, such noncompete clauses extend far beyond what is reasonably necessary to protect a franchisor’s legitimate intellectual property interests. Post termination noncompetition clauses restrict a franchisee from engaging in activities they have trained for at their own expense, which is contrary to the prevailing ‘right to work’ laws that already exist in many states.
Equally significant, the new law requires that franchise agreements for Virginia outlets be governed by Virginia law rather than the law of another state chosen by the franchisor. Historically, many franchisors have selected the law of their home state, often placing franchisees at a disadvantage when disputes arise. Beginning July 1, 2026, franchise agreements offered or entered into in Virginia must be subject to Virginia law.
While the law takes effect July 1, 2026, it is important to note that it is not retroactive and will not alter franchise agreements entered into, extended, or modified prior to that date.
AAFD, along with the Coalition of Franchisee Associations, actively supported passage of this legislation, including arranging for member testimony during committee hearings and advocating for stronger franchisee protections throughout the legislative process. This achievement represents an important step forward for franchisee rights in Virginia and may help pave the way for additional franchise fairness protections in the years ahead.
As with all legal matters, franchisees should consult qualified franchise counsel regarding how this new law may impact their individual agreements and renewal negotiations.
