Monday, May 19, 2008

FTC Issues Compliance Guide for Revised Franchise Rule

This posting was written by Peter Reap, Editor of CCH Business Franchise Guide.

The Federal Trade Commission issued its long-awaited Compliance Guide on May 5 to assist franchisors in complying with the 2007 revised franchise disclosure rule.

The Compliance Guide does not modify the new version of the franchise rule or exhaustively cover every requirement of the rule, the FTC cautioned, but is intended to explain the requirements of the rule, particularly its provisions that depart from the familiar Uniform Franchise Offering Circular Guidelines. The lengthy document provides numerous filled-in sample tables and charts to guide franchisors in their compliance efforts.

The Compliance Guide explains in detail what types of relationships are covered by the rule, what types are not covered, and what types are exempt. It also exaines the exclusions from the new rule and discusses who is responsible for compliance anhd the manner in which disclosures my be furnished. Each of the rule’s 23 disclosure items are then discussed.

General discussions of disclosure document preparation and updating, finacial performance representations, and additional prohibitions are included.

The Franchise Rule—2007 Compliance Guide appears here on the FTC website. It will be reported at CCH Business Franchise Guide ¶6086.

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