The Federal Trade Commission is seeking public comment on whether to make changes to its Rule known as Disclosure Requirements and Prohibitions Concerning Franchising (“Franchise Rule”) as part of its systematic review of all current FTC rules and guides.
Because the primary purpose of the Franchise Rule is to provide prospective franchisees the material information they need in order to weigh the risks and benefits of purchasing a franchise, the Rule requires franchisors to furnish a Franchise Disclosure Document that includes specified information about the franchisor, the franchise business, and the terms of the franchise agreement. The Rule also prohibits misrepresentations by franchise sellers.
In a Federal Register notice, the FTC is seeking comment on a wide range of questions, including whether prospective franchisees have benefitted from the Rule, whether it should be modified, what are the costs of compliance, and whether the Rule should be amended to account for technological or economic changes.
The Commission vote to approve the Federal Register notice was 5-0. The notice will be published in the Federal Register soon. Instructions for filing comments appear in the notice. Comments must be received 60 days after publication; they will be posted on the FTC’s public comments page. (FTC File No. R511003; the staff contact is Christine M. Todaro, Bureau of Consumer Protection, 202-326-3711.)
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