Ark. Code Ann. » Title 4 Chapter 72
Arkansas Code Annotated

Ark. Code Ann. § 4-72-206 (2026)

Unlawful practices of franchisors

✓ current as of May 2026
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  1. It is a violation of this subchapter for a franchisor, through an officer, agent, or employee to engage directly or indirectly in any of the following practices:
    1. To require a franchisee at the time of entering into a franchise arrangement to assent to a release, assignment, novation, waiver, or estoppel which would relieve a person from liability imposed by this subchapter;
    2. To prohibit directly or indirectly the right of free association among franchisees for a lawful purpose;
    3. To require or prohibit a change in management of a franchisee unless the requirement or prohibition of change is for a reasonable cause, which cause shall be stated in writing by the franchisor;
    4. To restrict the sale of any equity or debenture issue or the transfer of any security of a franchisee or in any way prevent or attempt to prevent the transfer, sale, or issuance of shares of stock or debentures to employees, personnel of the franchisee, or heirs of the principal owner as long as basic financial requirements of the franchisor are complied with, if the sale, transfer, or issuance does not have the effect of accomplishing a sale of the franchise;
    5. To provide any term or condition in a lease or other agreement ancillary or collateral to a franchise, which term or condition directly or indirectly violates this subchapter;
    6. To refuse to deal with a franchise in a commercially reasonable manner and in good faith; or
    7. To collect a percentage of the franchisee's sales as an advertising fee and not use these funds for the purpose of advertising the business conducted by the franchisee.
  2. A condition, stipulation, or provision requiring the application of the law of another state in lieu of this subchapter is void.

History. Acts 1977, No. 355, § 7; A.S.A. 1947, § 70-813; Acts 2019, No. 835, § 1.

Amendments. The 2019 amendment added (b) and designated the former section as (a); and made stylistic changes.

Case Notes

Commercially Reasonable Manner.

Summary judgment was inappropriate on claims brought under the Arkansas Franchise Practices Act, §§ 4-72-204(a)(1), 4-72-206(6), and 4-72-207(a)(3); significant issues remained as to the damages available to the franchisee and to the defenses the franchisor might be able to raise. Capital Equip., Inc. v. CNH America, LLC, 471 F. Supp. 2d 951 (E.D. Ark. 2006).

Substantial evidence supported the jury's finding that the company refused to deal with its franchise with the distributor in a commercially reasonable manner and in good faith; there was evidence that witnesses knew of the company's plan to force the distributor out of business and that the sale of one franchise to another was executed in furtherance of the company's overall plan to eliminate the distributor as a distributor. Miller Brewing Co. v. Ed Roleson, Jr., Inc., 365 Ark. 38, 223 S.W.3d 806 (2006).

Distributor presented proof demonstrating the existence of a material issue of fact as to whether the brewing company's actions constituted a refusal to deal with a franchise in a commercially reasonable manner and in good faith; it was therefore entitled to submit this claim to a jury. Southeastern Distrib. Co. v. Miller Brewing Co., 366 Ark. 560, 237 S.W.3d 63 (2006).

Duty of Franchisor.

Section 4-1-203 states that every contract imposes an obligation of good faith in the performance of the contract, and to establish a breach of that obligation, the plaintiff must demonstrate that the defendant was not honest in fact and that he acted with a bad motive; similarly, this section requires a franchisor to act in a commercially-reasonable manner and in good faith in its relationship with a franchisee. Southern Implement Co. v. Deere & Co., 122 F.3d 503 (8th Cir. 1997).

Whether franchisor had an obligation, contractual or otherwise, to prevent an unauthorized competitor from operating a facility in plaintiff's franchise region, was a question of fact for the jury. Southern Implement Co. v. Deere & Co., 122 F.3d 503 (8th Cir. 1997).

Cited: Coast-to-Coast Stores, Inc. v. Womack-Bowers, Inc., 818 F.2d 1398 (8th Cir. 1987); Reeder-Simco GMC, Inc. v. Volvo GM Heavy Truck Corp., 374 F.3d 701 (8th Cir. 2004).

Notes of Decisions
Cited in 5 cases, 1997–2006 · leading case: Miller Brewing Co. v. Ed Roleson, Jr., Inc., 223 S.W.3d 806 (Ark. 2006).
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Miller Brewing Co. v. Ed Roleson, Jr., Inc., 223 S.W.3d 806 (Ark. 2006). · cites it 16× “The statutory provision of the Franchise Act at issue is set forth in Ark.Code Ann. § 4-72-206 (Repl.2001), which states in relevant part as follows: It shall be a violation of this subchapter for any franchisor, through any officer, agent, or employee to engage directly or…”
Se. Distrib. Co. v. Miller Brewing Co., 237 S.W.3d 63 (Ark. 2006). · cites it 10× “] Ark. Code Ann. § 4-72-206 (Repl. 2001). Southeastern suggests that Miller’s acts in preapproving O’Conner and refusing to approve a buyer other than O’Conner were commercially unreasonable and not in good faith.”
Volvo Constr. Equip. North Am., Inc. v. CLM Equip. Co., 386 F.3d 581 (4th Cir. 2004). “” Ark. Code § 4-72-206(1). Although the inclusion of an anti-waiver provision in the Arkansas Act is indicative of the importance the Arkansas legislature attached to the statute, we see nothing in the provision itself to indicate that the legislature intended the Act to embody…”
Capital Equip., Inc. v. Cnh Am., LLC, 471 F. Supp. 2d 951 (E.D. Ark. 2006). · cites it 6× “” Ark.Code Ann. § 4-72-206. The Arkansas Supreme Court’s most recent discussion of the AFPA suggests that many actions taken by a franchisor — even if such actions are not a violation of a franchisor’s contractual obligations — may be found by the jury to be commercially…”
S. Implement v. Deere & Co. (8th Cir. 1997). · cites it 3× “e, Southern Implement filed a complaint alleging that Deere, by allowing Producer’s to operate through a facility within Southern Implement’s Elaine AOR: (1) breached its dealer agreement with Southern Implement, (2) broke the implied covenant of good faith and fair dealing, (3)…”
— Ark. Code Ann. § 4-72-206(1) — 2 cases
Volvo Constr. Equip. North Am., Inc. v. CLM Equip. Co., 386 F.3d 581 (4th Cir. 2004). “” Ark. Code § 4-72-206(1). Although the inclusion of an anti-waiver provision in the Arkansas Act is indicative of the importance the Arkansas legislature attached to the statute, we see nothing in the provision itself to indicate that the legislature intended the Act to embody…”
Capital Equip., Inc. v. Cnh Am., LLC, 471 F. Supp. 2d 951 (E.D. Ark. 2006). “” Ark.Code Ann. § 4-72-206. The Arkansas Supreme Court’s most recent discussion of the AFPA suggests that many actions taken by a franchisor — even if such actions are not a violation of a franchisor’s contractual obligations — may be found by the jury to be commercially…”
— Ark. Code Ann. § 4-72-206(6) — 2 cases
Miller Brewing Co. v. Ed Roleson, Jr., Inc., 223 S.W.3d 806 (Ark. 2006). “The statutory provision of the Franchise Act at issue is set forth in Ark.Code Ann. § 4-72-206 (Repl.2001), which states in relevant part as follows: It shall be a violation of this subchapter for any franchisor, through any officer, agent, or employee to engage directly or…”
Capital Equip., Inc. v. Cnh Am., LLC, 471 F. Supp. 2d 951 (E.D. Ark. 2006). “” Ark.Code Ann. § 4-72-206. The Arkansas Supreme Court’s most recent discussion of the AFPA suggests that many actions taken by a franchisor — even if such actions are not a violation of a franchisor’s contractual obligations — may be found by the jury to be commercially…”
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