Federal Trade Commission Approves Amendments to the Franchise Rule

Posted on January 25, 2007 by

Yesterday, the Federal Trade Commission approved final amendments to the Franchise Rule. This is a significant development for the entire franchise community, and signals for the first time that franchise disclosure regulations promulgated in the 1970's are being retooled to address the environment in which franchise business operate in the 21st century. The phase-in period for the new Rule will be July 1, 2007 to June 30, 2008. Between those dates, either the current or the new Rule format will be accepted by the FTC; after the latter date, only the new disclosure format will be accepted.

There will be significant implications for franchisors in making the transition to the new format, but ultimately the new Rule will be beneficial to both franchisors and franchise investors. We will be reviewing the final amendments to the Rule in the next few days and providing additional guidance to members. We will also be announcing the dates and locations of several regional Legal Roundtable educational programs that will focus on the implications of the new Rule.

We will be providing further guidance on these developments shortly. In the meantime, a press release explaining the Commission's decision and an imbedded link to the new Franchise Rule can be found at the FTC's website (www.ftc.gov).