Advisory Opinions

Our staff issue advisory opinions to help clarify FTC rules and decisions regarding either competition or consumer protection issues, often in response to requests from businesses and industry groups. To find a specific opinion, use the filters on this page. Parties may request advice from our staff concerning proposed conduct.

Franchise & Business Opportunities

The following staff opinions interpreting the original Franchise Rule remain useful as a source of interpretation for the amended Franchise Rule and the Business Opportunity Rule, except where the Statement of Basis and Purpose for the amended Franchise Rule or Business Opportunity Rule contradict a staff opinion.

Opinion 98-5

Possible applicability of Rule to licensing arrangement in which the seller becomes a minority shareholder entitled to a percentage of the profits of a corporation formed by the purchaser.

Opinion 98-4

Apparent applicability of Rule to licensing arrangement in which seller provides significant assistance and exercises significant control by restricting geographic territories in which licensees can solicit business.

Opinion 98-3

Discusses the "required payment" coverage prerequisite, concluding that Rule coverage will not be triggered by the fact that a seller obtains collateral as security for a non-negotiable note due more than six months after a purchaser opens his or her business.

Opinion 98-2

Discusses disclosure updating requirements, concluding that the Rule permits an additional update after the most recent quarterly update to disclose new litigation against a franchisor, but requires such an update only if the franchisor makes earnings claims and the litigation is material to the claims.

Opinion 97-9

Apparent inapplicablity of Franchise Rule to manufacturer's dealership program in which sole arguable payment to the manufacturer would occur, if at all, as a result of manufacturer's right to share in the proceeds of any sale of dealership assets.

Opinion 97-7

Apparent applicability of Franchise Rule to licensing to hospitals of a Travel Health Program, discussing whether the program's assistance is "significant" to the hospital's "entire method of operation."

Opinion 97-5

Applicability of Rule's earnings claim dicosure requirements to general media claims made in news stories and elsewhere if copies are given to prospective franchesees by the franchisor.

Opinion 97-4

Inappplicability of the Franchise Rule to possible co-branding relationship in which a licensor's system is to be sub-licensed by a third party franchisor to its franchesees, even though the license to the franchisor is covered by the Rule.

Opinion 97-3

Discusses the circumstances under which, in providing earnings information to loan processing officials at lending institutions to assist prospective franchisees in obtaining loans, franchisors may not be obligated to provide earnings claim disclosures.

Opinion 96-4

Apparent applicability of the Franchise Rule to a joint venture and license agreement. Discusses the ineffectiveness of transfers to affiliated companies of ownership of the mark and of franchisee waivers to avoid coverage or compliance obligations.

Opinion 96-5

Inapplicability of the Franchise Rule retroactively where the parties anticipated at the time of the purchase that the Rule would not apply because the only required payments were deferred until at least six months after the business opened. Concludes that the result does not change if the franchisor sues the franchisee for breach of contract for failure to open on schedule.

Opinion 96-2

Apparent applicability of the Franchise Rule to a commercial real estate affiliation program. Discusses in detail the likely availability of the fractional franchise exemption to the affiliation arrangement.

Opinion 96-1

Apparent applicability of the Franchise Rule to a log cabin distributorship. Discusses the criteria for coverage of product franchises, including the required payment element, and the fractional franchise exemption.

Opinion 95-10

Applicability of the Franchise Rule to vending machine manufacturers and independent marketing companies. An exhaustive discussion of the coverage issues arising in the sale of business opportunity ventures.

Pages