The legal basis for licensing child care organizations in Michigan is  Act 116, of the Public Acts of 1973, as amended. Foster family homes and foster family group homes are types of child care organizations as defined in Act 116.

As defined in Act 116:

Foster Family Home - means a private home in which 1 but not more than 4 minor children, who are not related to an adult member of the household by blood or marriage, or who are not placed in the household pursuant to the adoption code, are given care and supervision for 24 hours a day, for 4 or more days a week, for 2 or more consecutive weeks, unattended by a parent or legal guardian.

Foster Family Group Home - means a private home in which more than 4 but fewer than 7 minor children, who are not related to an adult member of the household by blood or marriage, or who are not placed in the household pursuant to the adoption code, are provided care for 24 hours a day, for 4 or more days a week, for 2 or more consecutive weeks, unattended by a parent or legal guardian.

Act 116 provides that the State, through the Department of Human Services, may authorize a child placing agency or approved governmental unit to investigate applicants for a foster home license and to certify to the State that a license should be issued.

When an agency determines that a family is in compliance with the Licensing Rules for Foster Family Homes and Foster Family Group Homes they recommend to the Department that a license be issued. The Department then issues the license. A license is issued to a specific person(s), at a specific address, for a specific number of children, specific age groups, gender, and characteristics.