Wednesday, March 23, 2011

NASAA Project Group Seeks Public Comment on Multi-Unit Franchising

This posting was written by John W. Arden.

In connection with its work on a new commentary, the Franchise and Business Opportunities Project Group of the North American Securities Administration (NASAA) is seeking public comments on disclosure obligations under the FTC franchise rule and state franchise laws for the many forms of multi-unit franchising.

Multi-unit franchising includes arrangements such as area development or representation agreements, area or regional franchises, development agent agreements, subfranchises, and master franchises.

Parties involved in multi-unit franchising often have questions about disclosure obligations under the FTC rule and state laws, according to Dale E. Cantone, Deputy Commissioner of the Securities Division of the Maryland Attorney General’s Office and Chair of the Franchise and Business Opportunities Project Group.

Some multi-unit franchise issues have been addressed by the FTC in FAQs 9 and 13 (CCH Business Franchise Guide ¶6090), by NASAA in Sections 20.2, 20.3 and 20.4 of the Commentary on the 2008 Franchise Registration and Disclosure Guidelines (CCH Business Franchise Guide ¶5706), and by California in Release 18-F (CCH Business Franchise Guide ¶5050.49).

The NASAA project group intends to give expanded guidance on these and other issues and seeks comments on what should be addressed in the commentary.

Interested persons should submit issues, ambiguities, and problems as well as potential solutions. The group invites submission of any relevant cases, statutory provisions, regulations, papers, or other resources.

Comments should be sent by April 22, 2011. Persons comfortable with sharing ideas with attribution should send their comments directly to project group members Dale Cantone ( and Theresa Leets (

Those preferring to share ideas on a confidential basis should send comments to Warren Lewis of the Akerman law firm (, Ron Gardner of Dady & Gardner (, or Chuck Modell of Larkin Hoffman (

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