In July 2026, New York City unveiled its “click-to-cancel” rule, which aims to protect consumers from being kept in a subscription or agreement without an easy way out. While this is a first for the city, it is not the first for New York State.
Let’s discuss what franchisors and their franchisees operating in New York should know about their rights and where certain jurisdictions begin and end.
New York City’s Action
New York City recently announced the finalization and adoption of its “click to cancel” rule, which will take effect on Oct. 1, 2026. Touted as the first of its kind among cities in the U.S., the rule requires businesses to clearly explain subscription terms, clearly disclose consumers’ rights, and provide a straightforward cancellation process using the same method as sign-up when practical.
This is an update to Title 20 of the New York City Administrative Code, “which prohibits deceptive or unconscionable trade practices in the sale of consumer goods or services.”
Furthermore, NYC.gov lays out some direct stipulations of the rule:
- Companies must clearly explain subscription terms to consumers.
- Companies must clearly disclose consumers’ rights when buying or cancelling subscriptions.
- Companies must provide clients with a straightforward cancellation process in the same method as the sign-up.
- Companies cannot ask consumers to pay to ship them things they gave for free.
The rule is enforced by the New York City Department of Consumer and Worker Protection (DCWP), with civil penalties of $525 per violation, and up to $3,500 for repeat offenses. Offenders may also be liable for restitution of the amounts charged after a consumer’s first cancellation attempt. The city says the rule applies to automatic-renewal and continuous-service subscriptions and requires straightforward cancellation in the same method used to sign up.
“In our city, we’re drawing a clear line: if you can sign up with a click, you must be able to cancel with one,” said New York City Mayor Zohran Mamdami.
New York State’s ‘Click-To-Cancel’ Rule
New York State has a "click-to-cancel" requirement, although it is part of the state's automatic renewal law rather than a separately named “Click-to-Cancel Act.” Under New York General Business Law § 527-a, businesses that offer automatic renewals or continuous service agreements to New York consumers must:
- Make the automatic renewal terms clear before the consumer signs up.
- Obtain the consumer's affirmative consent.
- Provide a post-purchase acknowledgment with the renewal terms and cancellation instructions.
- Allow consumers to cancel using a simple mechanism that is at least as easy as the method used to enroll, and through the same medium used to sign up.
Of course, the state may impose fines, as well. A knowing violation can cost violators up to $500 for a single violation or $1,000 for multiple violations from a single act or incident.
While New York City businesses were already obligated to comply with NYS GBL § 527-a, the NYC Click-To-Cancel rule adds extra layers of consumer protection.
No Federal Rule Applies, Yet
The federal government does not currently have an independent click-to-cancel rule.
As previously discussed, the Federal Trade Commission’s (FTC) click-to-cancel rule was set to go into effect on July 14, 2025. Just like the NYS and NYC rules, this would have impacted franchisors, their New York franchisees, and their clientele and subscribers.
But one week prior to the anticipated effective date, the U.S. Court of Appeals for the Eighth Circuit vacated the rule. The court found that the FTC had failed to conduct a necessary preliminary cost-benefit analysis, which led to the rule’s invalidation.
Even without a specific "Click-to-Cancel" rule, the FTC still targets deceptive auto-renewals and unfair cancellation hurdles using older laws, like the Restore Online Shoppers' Confidence Act and Section 5 of the FTC Act.
Nearly 30 states have enacted their own Automatic Renewal Laws (ARLs). Within this framework, at least 15 states – including California, Colorado, Connecticut, and Illinois – explicitly mandate a streamlined, digital “click-to-cancel” mechanism.
What Franchisors Should Do
For compliance purposes, New York-based businesses should work with their vendors and IT departments to ensure that accommodations can be made to allow consumers and subscribers to easily opt out or cancel any memberships (or subscriptions).
This will apply most directly to subscription-heavy franchise systems, including fitness and wellness franchises, software providers, and those using membership models. Any franchise system should consult a franchise lawyer to review and revise its New York City consumer flows. It may also be beneficial to create a separate New York State click-to-cancel compliance checklist.
News, appointments, and state and federal laws are announced at a rapid pace. That is why franchisors and franchisees should collaborate with qualified NY franchise counsel to perform legal audits of their enterprises and review compliance with existing and forthcoming laws.
Contact Lusthaus Law
Lusthaus Law’s website is a resource for New York franchisors and franchisees. We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.
