Sending Office: Honorable Tony Cardenas
Current Cosigners: Cárdenas (D-CA), Bilirakis (R-FL),
Brownley (D-CA), Van Drew (D-NJ), Walker (R-NC), Johnson (D-GA)
As part of its systematic review of all current Federal Trade Commission (FTC) rules, the FTC is in the process of reviewing the Franchise Rule. As the rule is one of the most important laws for the franchise sector, we urge you to join us in sending the
following letter to Chairman Joseph Simons of the FTC asking for the continuation of the rule.
The primary function of the rule requires franchisors to provide important information to prospective franchisees about the nature of the franchise, the value and profitability of the franchise, and key costs of operation prior to the sale.
This ensures that prospective entrepreneurs thinking about investing in a franchise get the critical information they need to understand the costs and risks associated with the purchase and operation. The rule also keeps the disclosure compliance costs
reasonable for both the franchisees and franchisors.
The FTC Franchise Rule has created a more efficient franchising system, where expectations and rules are clear for all parties. Material changes to or elimination of the rule could impose unforeseen obstacles for franchisors as each state creates new and
differing standards on the franchise business relationship. The current Rule is a tried and tested rule supported by both franchisees and franchisors, and its continuation is important for the health of the franchise industry.
If you have any questions or would like to sign on to the letter please email Jaqueline Serrano with the office of Congressman Cárdenas (email@example.com) or Chris Jones with the office
of Congressman Gus Bilirakis (firstname.lastname@example.org).
The deadline for co-signers will be COB Monday, April 15th.
TONY CÁRDENAS GUS BILIRAKIS
MEMBER OF CONGRESS MEMBER OF CONGRESS
April xx, 2019
The Honorable Joseph Simons
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington DC 20580
Dear Chairman Simons:
We are writing regarding the February 14, 2019, request for public comment made by the Federal Trade Commission (FTC) regarding its decennial review of the FTC Franchise Rule. As you may be aware, the FTC has put forth thirteen questions to assess the efficiency,
cost, benefits, and regulatory impact of the rule. Since the development of the first Franchise Rule promulgated in 1978, the rule has been one of the most important laws for the franchise sector. The FTC Franchise Rule was updated more than a decade ago
following a 10-year-long, constructive, consensus-based process jointly led by franchisors and franchisees that delivers clear guidelines for franchisors to follow and transparent information for prospective franchise owners to do their due diligence before
making an investment. That process worked, and the current FTC rule has led to a growing franchise economy with more than 733,000 locations who together employ nearly 8 million Americans. In the last decade, franchises have grown at nearly twice the rate
of non-franchise businesses.
The current rule requires franchisors to provide all potential franchisees with a Franchise Disclosure Document (FDD) containing 23 specific items of information about the offered franchise, its officers, and other franchisees. The Rule discloses prospective
purchasers of franchises transparent information on risks and benefits of such an investment. The material contained in the FDD is crucial to understanding the health and financial wellbeing of the franchise system. Furthermore, the health of any franchise
system is dependent upon franchisees who understand the terms contained in the license agreement. By requiring clear and consistent disclosure of information at the outset of all franchise relationships, and through its evenhanded federal application, the
existing rule allows for better-performing franchise brands and franchise business owners to succeed together.
The franchise community has consistently supported regulatory policies designed to ensure that prospective franchisees receive relevant information about their proposed franchise purchase sufficiently in advance of their purchase to permit them to make an
informed and unpressured purchase decision. The current rule supports a proper balance between the legitimate disclosure needs of prospective franchisees and the compliance burdens and costs, borne by both franchisors and franchisees, such that a disclosure
inevitably requires. The current rule has created a more efficient franchising system, where expectations are clear, rules are transparent, and all systems are required to comply with its requirements.
For these reasons, we strongly affirm a continuing need for the rule, which represents the franchise sector’s interests and desire for thoughtful, fair regulation.
e-Dear Colleague version 2.0