Earlier this year, Virginia Governor Abigail Spanberger signed into law a bill that amends the Virginia Retail Franchising Act (“Virgina Act”) in two important ways, effective July 1, 2026.

Amended Virginia Act Bans Most Post-Term Non-Competes in Franchise Agreements

As the result of the addition of new § 13.1-563(D) to § 13.1-563 of the Virginia Act, on or after July 1, franchisors may not offer or enter into a franchise agreement in the Commonwealth of Virginia that includes a post-term non-compete provision. Specifically, the amended law prohibits non-competes that “restrict the right of a franchisee to engage in the business of offering, selling, or distributing good or services at retail after termination or expiration of the franchise agreement.”

There is one limited exception to the amended law. When a franchisee sells a franchise to a third party or back to the franchisor at a mutually agreed-upon price, the sale may include a post-term non-compete provision that restricts the right of the franchisee to engage in the business of offering, selling, or distributing goods or services in a retail setting for up to two years after the sale.

Amended Virginia Act Requires Virginia Governing Law in Franchise Agreements

As the result of the addition of new § 13.1-563(A) to § 13.1-559 of the Virginia Act, all franchise contracts or agreements offered or entered into on or after July 1 in the Commonwealth of Virginia will be governed by Virginia law, regardless of any governing law or choice-of-law provisions to the contrary.

What Does This Mean for Franchisors in Virginia?

The Virginia State Corporation Commission, Division of Securities and Retail Franchising released a notice to both registered and exempt franchisors to provide guidance on their responsibilities under the amended Virginia Act on and after July 1, 2026. Essentially, these franchisors have two options.

1. If the franchisor does not plan to offer or sell a franchise in the Commonwealth of Virginia on or after July 1, 2026, it can choose not to amend its franchise disclosure document (FDD) and franchise contracts and agreements until its next franchise renewal in the state.
2. However, if the franchisor plans to offer or sell a franchise in the Commonwealth of Virginia on or after July 1, the franchisor must first submit an amendment filing that modifies any language in its FDD and franchise contracts and agreements relating to post-term non-compete and governing law/choice-of-law provisions that violates the amended Virginia Act. Franchisors may choose to modify the relevant language in the body of these documents, or address the modifications in a Virginia addendum to the documents.

We are in the process of working with our clients to prepare revised Virginia addenda and submit amendment filings. Please feel free to reach out to me or any member of Larkin Hoffman’s Franchise Group for further information or assistance.