The Federal Trade Commission (FTC) is requesting public comment on its trade regulation rule titled “Disclosure Requirements and Prohibitions Concerning Franchising” (the rule). The rule makes it an unfair or deceptive act or practice for franchisors to fail to give prospective franchisees a franchise disclosure document providing specified information about the franchisor, the franchise business and the terms of the franchise agreement. The rule also prohibits related misrepresentations by franchise sellers. The FTC is soliciting comments about the efficiency, costs, benefits and regulatory impact of the rule as part of its systematic review of all current commission regulations and guides. Interested persons have the opportunity to submit written data, views and arguments concerning the rule to the FTC. This is a summary of the FTC’s request for comment.

  • The franchise rule was first enacted in 1979.

The FTC issued the original franchise rule pursuant to its authority under Section 5 of the Federal Trade Commission Act to proscribe unfair or deceptive acts or practices. The primary purpose of the rule is to provide prospective purchasers of franchises the material information they need in order to weigh the risks and benefits of such an investment by providing disclosure requirements in a uniform format that facilitates comparison shopping.

  • Periodic review by the FTC of the rule leads to amendments.

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