What Do You Think About the FTC Franchise Disclosure Rule?

The Federal Trade Commission (FTC) drafter of the Franchise Disclosure Rule, which requires the delivery of the Franchise Disclosure Document to prospective franchisee is looking for comments.  The comment requires part of the FTC periodic review of the cost and benefits of the regulations.  Specifically, the FTC is looking for comments on the following questions: 

1.                              Is there a continuing need for the [Franchise Disclosure] Rule? Why or why not?

2.            What benefits, if any, has the Rule provided to prospective franchisees, including small businesses? What evidence supports the asserted benefits?

3.            What modifications, if any, should be made to the Rule to increase its benefits to prospective franchisees, including small businesses?

a.            What evidence supports the proposed modifications?

b.            How would these modifications affect the costs the Rule imposes on franchisors and franchise sellers, including small businesses?

c.             How would these modifications affect the benefits to prospective franchisees?

4.            What impact has the Rule had on the flow of truthful information and on the flow of deceptive information to prospective franchisees?

5.            What significant costs, if any, has the Rule imposed on prospective franchisees, including small businesses? What evidence supports the asserted costs?

6.            What modifications, if any, should be made to the Rule to reduce any costs on prospective franchisees, including small businesses?

a.            What evidence supports the proposed modifications?

b.            How would these modifications affect the benefits provided by the Rule?

7.            What benefits, if any, has the Rule provided to franchisors and franchise sellers, including small businesses? What evidence supports the asserted benefits?

8.            What modifications, if any, should be made to the Rule to increase its benefits to franchisors and franchise sellers, including small businesses?

a.            What evidence supports the proposed modifications?

b.            How would these modifications affect the costs the Rule imposes on franchisors and franchise sellers?

c.             How would these modifications affect the benefits to prospective franchisees?

9.            What significant costs, if any, including costs of compliance, has the Rule imposed on franchisors and franchise sellers, including small businesses? What evidence supports the asserted costs?

10.          What modifications, if any, should be made to the Rule to reduce the costs imposed on franchisors and franchise sellers, including small businesses?

a.            What evidence supports the proposed modifications?

b.            How would these modifications affect the costs the Rule imposes on franchisors and franchise sellers?

c.             How would these modifications affect the benefits to prospective franchisees?

11.          What evidence is available concerning the degree of industry compliance with the Rule?

12.          What modifications, if any, should be made to the Rule to account for changes in relevant technology or economic conditions? What evidence supports the proposed modifications?

13.          Provide comment on any overlap or conflict with other federal, state, or local laws, or regulations.

a.            What evidence supports any asserted conflicts?

b.            With reference to asserted conflicts, should the Rule be modified? If so, why or why not?

The questions posed by the FTC provide a chance for introspective of the Franchise Disclosure Rule and perhaps more particularly the Franchise Disclosure Document.  I would gander to say the Franchise Disclosure Rule and Franchise Disclosure Document (FDD) will not be abandon or eliminated by the FTC.  And, if the FTC did abandon the Rule, many states have enacted like statutes and regulations that mirror or greater than the federal FTC Franchise Disclosure Rule, and therefore, such abandonment will cause minor alteration the regulatory nature of franchising. 

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