Rolls-Royce and Paccar Seek Exemption from FTC Franchise Rule

For Your Information

Rolls-Royce Corporation has asked the Federal Trade Commission to exempt the company's authorized maintenance centers for turboprop, turbofan, and industrial gas turbine engines from the disclosure requirements of the FTC's Franchise Rule. In a separate petition, Paccar, Inc. also has asked the FTC to exempt its automobile dealership operations from the disclosure requirements of the Franchise Rule.

The FTC's Franchise Rule requires the seller of a franchise, among other things, to provide each prospective franchisee with a basic disclosure document containing detailed information about the nature of its business and the terms of the proposed franchise relationship. The Commission previously has granted exemptions from the Rule to nine other motor vehicle manufacturers or importers.

Rolls-Royce

Rolls-Royce Corporation is a wholly-owned subsidiary of Rolls-Royce plc, and manufactures turboprop, turbofan, and industrial gas turbine engines for sale in the defense and civilian aerospace and industrial markets. Rolls-Royce also provides aftermarket support for some of its model engines through a combination of company-owned and independent third-party authorized maintenance centers (AMCs). The AMCs perform repair, overhaul, and maintenance services for customers under the Rolls-Royce trademark. According to Rolls-Royce's petition, an investment in a Rolls-Royce AMC is among the most costly of franchises, ensuring that only those with both technical and business sophistication opt to join the AMC program. There are currently nine AMCs in the United States. Prior to the expiration of these current franchise agreements, Rolls Royce intends to award a limited number of new AMCs starting on January 1, 2004.

In its petition, Rolls-Royce contends that the conditions most likely to lead to deceptive practices are absent from their sales of engine repair and overhaul service franchisees. The petition states that prospective AMCs have prior experience in the industry. In addition, the petition states that sufficient financial and business information, along with ample time to review all of the information and seek professional advice, are provided to prospective AMCs as a matter of standard practice.

Paccar, Inc.

Paccar, Inc. manufactures heavy duty and medium-duty trucks, truck parts, and accessories that it distributes through a network of 131 dealers operating under the names "Kenworth" and "Peterbilt." The dealers offer and perform warranty repair and bodywork; sell, rent, or lease used cars; and offer financing and insurance in connection with truck sales. Paccar has appointed only 11 new dealers since 1994. Most of its dealers have been in business for at least 10 years, and one third have been Paccar dealers for more than 20 years.

In its petition, Paccar contends that conditions most likely to lead to deceptive practices are absent from Paccar's sales of truck dealerships, due to the amount of the investment involved, the procedures Paccar has in place, and the prior experience of its prospective dealers. In addition, sufficient financial and business information, along with the ample time to review all of the information and seek professional advice, are provided to prospective dealers as a matter of standard practice, according to Paccar.

The petitions were be published in the Federal Register on March 31, 2003 and will be subject to public comment for 60 days, until May 30, 2003. Comments should be addressed to: Office of the Secretary, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Copies of the petition and the Federal Register notice are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

 

(FTC Matter No. R511003)

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