New AI Laws Signal Shift Toward Transparency and Accountability
Governor Kathy Hochul has signed a series of AI-focused measures that reshape how businesses can use artificial intelligence in marketing and branding.
Key AI Laws Now in Effect or Pending
-
AI Transparency in Advertising Act
Effective June 9, 2026
Requires clear disclosure when AI-generated “synthetic performers” appear in advertisements distributed in New York. - Posthumous Right of Publicity Expansion Act
Effective December 11, 2025
Requires consent from heirs or executors before using AI-generated replicas or likenesses of deceased individuals for commercial purposes.
In addition New York has established an AI oversight office to study AI impact on labor consumers and emerging technologies reinforcing the state’s long-term regulatory focus.
What Counts as a “Synthetic Performer” Under the Law?
Under the new advertising rules a synthetic performer includes:
- AI-generated or AI-altered human figures
- Digital avatars that appear to be real people
- AI-enhanced employees influencers or spokespersons
If such content appears in advertising distributed in New York, a clear and visible disclosure is mandatory.
Important Exclusions
The law does not apply to:
- Audio-only content
- AI used only for translation
-
Expressive works like films or TV shows where the synthetic character is part of the original work
Penalties for Non-Compliance
- $1,000 for a first violation
- $5,000 for each additional violation
Why Franchise Systems Should Pay Close Attention
Franchise brands often rely on centralized marketing assets that are localized by franchisees. This structure creates shared compliance risk.
Potential Franchise Exposure Includes:
- National campaigns using AI-generated models
- Local franchisee social media posts with AI avatars
- Influencer campaigns using AI-altered human visuals
- Virtual testimonials or deepfake-style endorsements
Both franchisors and franchisees could face liability if disclosures are missing.
New Rules on Using Deceased Individuals’ Likenesses
New York has expanded post-mortem publicity rights to explicitly cover AI-generated replicas of deceased individuals.
What’s Now Required
- Prior authorization from an heir or executor
- Consent covering AI simulations, not just traditional likeness rights
Penalties
- $2,000 statutory damages per violation
- Or actual damages, including profits
- Potential punitive damages
These rules apply immediately once effective.
Implications for Franchise Advertising and Branding
Franchise systems using historical figures, celebrity endorsements, or legacy branding must now reassess their rights.
Franchise brands should:
- Audit existing endorsement and licensing agreements
- Update contracts to explicitly cover AI-generated uses
- Restrict franchisees from using deceased personalities without approval
- Clarify responsibility for securing publicity rights in franchise agreements
Older “all media” clauses may no longer be sufficient in the AI era.
What Franchisors and Franchisees Should Do Now
To prepare for New York’s evolving AI regulations, franchise systems should consider:
- Adding AI-specific disclosure requirements to ad approval processes
- Updating franchise agreements and FDDs with AI compliance language
- Requiring agencies and vendors to flag AI-generated content
- Implementing internal review steps for synthetic-performer usage
- Treating AI marketing as a regulated activity, not just innovation
A New Era for AI Advertising and Franchising
New York approach makes one thing clear: AI-driven efficiency must be balanced with transparency and consent. For franchise brands, compliance is no longer optional—it’s becoming a core part of maintaining consumer trust and protecting brand reputation.
As AI adoption accelerates, franchisors and franchisees alike will need to ensure that innovation keeps pace with regulation, especially in influential markets like New York.
Conclusion
New York’s new AI advertising and publicity laws mark a clear turning point for businesses and franchise systems using artificial intelligence. With stricter rules around disclosure, consent, and accountability, franchisors and franchisees must review their marketing practices now to avoid legal risk and protect brand trust as AI becomes more deeply embedded in everyday operations.
What Do You Think?
Q: Do you think AI-generated ads should always be clearly disclosed to consumers, even if they look completely real?
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