New laws significantly update Virginia’s Retail Franchising Act
By Franchise Standards Committee
On April 13, 2026, Virginia Governor Abigail Spanberger signed into law significant updates to Virginia’s Retail Franchising Act. The identical bills, House Bill 69, introduced by Delegate Dan Helmer, and Senate Bill 240, introduced by Senator Christopher Head, become effective July 1, 2026, but will not alter franchise agreements entered into, extended, or modified prior to July 1, 2026.
The two major changes are a ban on post-term noncompete clauses and that franchise agreements will be governed by Virginia law.
Specifically, the noncompete provision of the law states that it is unlawful “to offer or enter into a franchise agreement that restricts the right of a franchisee to engage in the business of offering, selling, or distributing goods or services at retail after termination or expiration of the franchise agreement.”
This effectively bans noncompete clauses in a franchise agreement sold to a franchisee in Virginia. While this is not an issue in general for hoteliers, it is a significant change in other franchise industries. The second part of the new law states, “Any franchise contract or agreement offered or entered into pursuant to the terms of this chapter shall be governed by the laws of the Commonwealth.”
This is a major change as most franchisors choose the law of another state, often of their home state, as the governing law. After July 1, 2026, these contracts will be governed under Virginia law.
As with all legal matters, members should consult a reputable franchise attorney with any questions.
Image: Brian Jackson/stock.adobe.com
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