Bipartisan Congressional Coalition Encourages FTC To Support Franchising, Improve Franchise Rule
WASHINGTON – The International Franchise Association (IFA) today applauded a bipartisan coalition of 15 members of the U.S. Senate for urging the Federal Trade Commission (FTC) to strengthen and improve the Franchise Rule.
Since 1978, the Franchise Rule has been the primary federal regulation governing the franchise sector, requiring franchisors to prepare an extensive disclosure document known as a Franchise Disclosure Document (FDD) for prospective franchise purchasers. In March 2023, the FTC issued a solicitation to gather more information about the franchise model.
“We are grateful to this robust and bipartisan group of lawmakers for standing up for the franchise model and recommending the Commissioners consider practical improvements to the Franchise Rule,” said Michael Layman, IFA senior vice president for government relations and public affairs. “It is clear there is a need to improve the Franchise Rule to ensure transparency between prospective franchisees and brands seeking to expand using the franchise. These bipartisan recommendations, which echo many of the recommendations made by IFA’s Article 11 Working Group, the GAO, and state regulators in NASAA’s franchise group, will modernize presale disclosures and make the information provided to prospective franchisees accessible and understandable, laying the foundation for strong franchise relationships. Unfortunately, unwarranted and unjustified skepticism demonstrated by the FTC’s broad, biased request for information (RFI) soliciting information to support a franchise relationship rule would be the latest domino in the unprecedented regulatory assault from the federal government toward a thriving sector of the American economy.”
In the letter, the lawmakers outline three specific areas of improvement for the franchise model, including:
- Provide greater visibility and transparency of key franchise terms and conditions;
- Modernize franchise disclosures, including executive summaries to FDD’s;
- Encourage added dialogue through the promotion of independent franchisee associations and franchise advisory councils.
The letter was led by U.S. Sen. Jerry Moran (R-KS) and Sen. Gary Peters (D-MI).
Read the full Senate letter here.
A similar letter was sent by more than 80 members of the U.S. House earlier in the month. The House letter is available here.
Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 790,492 franchise establishments that support nearly 8.4 million direct jobs, $825.4 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.