TEXAS BUSINESS LAW
Texas Business Practices Laws Every Owner Should Know
Texas business practices law is the set of state rules that govern how companies compete, advertise, protect information, and sell business opportunities — chiefly antitrust, covenants not to compete, the Deceptive Trade Practices Act, trade secrets, and the Business Opportunity Act. Most are straightforward, but a single misstep — an overbroad non-compete, a misleading ad, a missed filing — can cost a business far more than the underlying conduct was ever worth.
This guide walks through the five areas Texas owners run into most, and what each one actually requires.
Texas Antitrust: The Free Enterprise and Antitrust Act
The Texas Free Enterprise and Antitrust Act of 1983 (Texas Business & Commerce Code, Chapter 15) prohibits contracts, combinations, and conspiracies in restraint of trade, monopolization, and similar conduct occurring wholly or partly within Texas. By statute, it is construed in harmony with federal antitrust law, so Texas courts lean on Sherman Act precedent when applying it.
That federal-harmony rule matters for claims like predatory pricing. Under prevailing antitrust law, a predatory-pricing plaintiff generally has to show the defendant priced below an appropriate measure of cost and had a dangerous probability of recouping those losses later — a high bar that protects ordinary aggressive discounting. Texas antitrust violations can be enforced by the Attorney General or by a private party injured by the violation; a private claimant must serve the Attorney General with a copy of the petition.
Covenants Not to Compete
Non-competes are enforceable in Texas, but only on terms the statute allows. Under the Covenants Not to Compete Act (Business & Commerce Code §§ 15.50–15.52), a covenant is enforceable if it is ancillary to an otherwise enforceable agreement and is reasonable in time, geographic area, and scope of activity — no broader than necessary to protect the employer’s legitimate business interest, such as goodwill or confidential information.
A common misconception is that a Texas court will throw out an overbroad non-compete entirely. It usually does the opposite. Section 15.51(c) directs that if the limits are unreasonable, the court shall reform the covenant to make them reasonable and enforce it as reformed. The trade-off for the employer: once reformation is required, it cannot recover damages for breaches that occurred before the rewrite, and relief is limited to an injunction going forward.
One federal wrinkle worth noting: the FTC’s 2024 rule that would have banned most non-competes nationwide was vacated by a federal court, and in 2025 the agency dropped its appeals and abandoned the rule. As of 2026 there is no federal non-compete ban, and Texas state law controls enforceability — though the FTC has signaled it may still challenge individual agreements it views as abusive.
The Deceptive Trade Practices Act (DTPA)
The Texas Deceptive Trade Practices–Consumer Protection Act (Business & Commerce Code, Chapter 17) gives consumers a powerful cause of action and a lower burden of proof than common-law fraud. Its “laundry list” of prohibited acts includes false or misleading statements about the origin or quality of goods, false advertising, misrepresenting warranties, and unconscionable conduct that takes advantage of a consumer’s lack of knowledge.
The teeth are in the damages. A prevailing consumer recovers economic damages, and for a violation committed knowingly, the court may award up to three times (treble) economic damages, plus damages for mental anguish. That multiplier is why a relatively small deceptive act can turn into an outsized judgment, and why advertising and sales claims deserve a careful eye.
Trade Secrets
Confidential business information — formulas, customer lists, pricing models, processes — is protected under the Texas Uniform Trade Secrets Act (TUTSA), effective September 1, 2013 and codified at Chapter 134A of the Civil Practice and Remedies Code. TUTSA defines what qualifies as a trade secret, authorizes injunctions against misappropriation, and allows a prevailing party to recover attorney’s fees where misappropriation was willful and malicious or a claim was brought in bad faith.
Protection is not automatic. A trade secret only stays protected while the business takes reasonable steps to keep it secret — confidentiality agreements, access controls, and clear handling rules. Lose the secrecy and you usually lose the claim.
Business Opportunities and the Franchise Exemption
Texas does not have a standalone franchise-registration law, but it does regulate “business opportunities” under the Business Opportunity Act (Business & Commerce Code, Chapter 51). A business opportunity is broadly a sale or lease of products, equipment, supplies, or services that enables the buyer to start a business, with a representation that the buyer will profit or that the seller will provide a marketing plan or assistance.
Franchises fall within that broad definition, but franchisors that comply with the FTC Franchise Rule (16 C.F.R. Part 436) are excluded from the Act. To claim the exclusion, the franchisor files a one-time Business Opportunity Exemption Notice (Form 2703) with the Texas Secretary of State and pays a $25 fee before offering or selling a franchise in Texas. Skipping that filing is a frequent — and avoidable — compliance gap.
The Five Areas at a Glance
| Area | Texas authority | What it requires of you |
|---|---|---|
| Antitrust | Free Enterprise & Antitrust Act (Ch. 15) | Don’t fix prices, rig markets, or monopolize; aligned with federal law |
| Non-competes | Covenants Not to Compete Act (§§ 15.50–15.52) | Keep limits reasonable; courts reform, not void, overbroad terms |
| Deceptive practices | DTPA (Ch. 17) | No false/misleading or unconscionable consumer claims; treble exposure |
| Trade secrets | TUTSA (Ch. 134A) | Take reasonable steps to keep secrets secret |
| Business opportunities | Business Opportunity Act (Ch. 51) | File the franchise exemption notice (Form 2703) if it applies |
Frequently Asked Questions
Will a Texas court cancel my non-compete if it’s too broad?
Usually not. Section 15.51(c) directs the court to reform an overbroad covenant to reasonable limits and enforce it as reformed. The catch is that the employer loses pre-reformation damages and is limited to injunctive relief once reformation is required.
Does Texas require franchisors to register?
No. Texas has no franchise-registration statute. Instead, franchisors that comply with the FTC Franchise Rule file a Business Opportunity Exemption Notice (Form 2703) with the Secretary of State, with a $25 fee, before offering franchises in the state.
How serious are DTPA damages?
Serious. A consumer who proves a knowing violation can recover up to three times their economic damages plus mental anguish, which is why even a minor misrepresentation in advertising or sales can create large exposure.
How do I protect a trade secret in Texas?
Treat it as a secret. Under TUTSA, protection depends on reasonable measures — confidentiality agreements, limited access, and documented handling — combined with the information actually deriving value from not being known.
Texas business practices laws reward owners who get the details right and punish those who don’t. Reidel Law Firm advises Texas businesses on compliance, contracts, and competition issues on a flat-fee basis with direct attorney access. Talk to a Texas business attorney →
