Friday Franchise Minute
What is the Federal Trade Commission and what control do they have over franchising? A 30,000-foot view
The Federal Trade Commission, or FTC for short, is the governing body for franchising at the federal level. The FTC Rule that controls franchising is known as “Disclosure Requirements and Prohibitions Concerning Franchising”. The FTC Rule controls a franchisor’s ability to sell franchises in each of the 50 states, D.C., Puerto Rico and the U.S. Virgin Islands. There are state specific laws controlling franchising, but we will discuss those another day.
The FTC Rule tells the franchisor what specific information must be included in the Franchise Disclosure Document and when the franchisor must give the Franchise Disclosure Document to a prospective franchisee.
If you are franchising your business, or have recently franchised your business, it may benefit you to read through the FTC Rule’s requirements to ensure that your Franchise Disclosure Document is in compliance.
If you would like to read through the FTC Rule, and have some spare time and a lot of caffeine, you can download it from the FTC’s website at http://bit.ly/2irPQLG.