[Federal Register Volume 85, Number 176 (Thursday, September 10, 2020)]
[Notices]
[Pages 55850-55852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20006]
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FEDERAL TRADE COMMISSION
Public Workshop Examining Franchise Rule
AGENCY: Federal Trade Commission.
ACTION: Public workshop; request for public comment.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is
holding a public workshop relating to its March 13, 2019 Request for
Public Comment on the Franchise Rule (``2019 Request for Comment'').
The workshop will explore issues relating to the Franchise Rule's
disclosure requirements, the Rule's prohibitions against disclaimers,
and other issues raised in comments received in response to the 2019
Request for Comment.
DATES: The public workshop will be held on November 10, 2020, from 1:00
p.m. until 4:30 p.m. ET. The workshop will be held online. Requests to
participate as a panelist must be received by October 1, 2020. Any
written comments related to the issues discussed at the workshop must
be received by December 17, 2020.
ADDRESSES: Interested parties may file a comment or a request to
participate as a panelist online or on paper, by following the
instructions in the Filing Comments and Requests to Participate as a
Panelist part of the SUPPLEMENTARY INFORMATION section below.
FOR FURTHER INFORMATION CONTACT: Christine M. Todaro (202-326-3711),
Division of Marketing Practices, Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Commission issued the original Franchise Rule pursuant to its
authority under Section 5 of the Federal Trade Commission Act to
proscribe unfair or deceptive acts or practices.\1\ The primary purpose
of the Rule is to provide prospective purchasers of franchises the
material information they need in order to weigh the risks and benefits
of such an investment by providing disclosure requirements in a uniform
format that facilitates comparison shopping.\2\ The Commission adopted
the Rule on December 21, 1978, and it became fully effective on July
21, 1979.\3\
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\1\ Section 5(a) of the Federal Trade Commission Act, 15 U.S.C.
45(a), prohibits ``unfair or deceptive acts or practices in or
affecting commerce.''
\2\ Original Franchise Rule Statement of Basis and Purpose
(``Original SBP''), 43 FR 59614 (Dec. 21, 1978).
\3\ Id.
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In 1995, the Commission announced a regulatory review of the
Franchise Rule.\4\ That proceeding, which concluded that the Rule was
still needed but could be improved, led to amendments to the Rule
issued in 2007 (the ``Amended Rule''), which took effect on July 1,
2008.\5\ The Amended Rule, among other changes, sought to reduce
inconsistencies between federal and state pre-sale disclosure
requirements and established a set of uniform disclosure requirements
in a Franchise Disclosure Document (``FDD''). Commission staff has
continued to work closely with state franchise regulators to promote
uniformity regarding franchise disclosure requirements.
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\4\ 60 FR 17656 (Apr. 7, 1995).
\5\ Amended Franchise Rule Statement of Basis and Purpose
(``Amended Rule SBP''), 72 FR 15444 (Mar. 30, 2007).
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The Amended Rule requires franchisors to provide prospective
franchisees with their FDD at least 14 calendar days before they make
any payment or sign a binding agreement in connection with a proposed
franchise sale.\6\ The FDD provides prospective franchise purchasers
with 23 items of information material to their investment decision,
including the initial fees and estimated initial investment required;
the litigation and bankruptcy history of the franchisor, its officers
and key executives; the financial performance of existing company owned
and franchised outlets; contact information for current and former
franchisees; and financial statements reflecting the ability of the
franchisor to provide promised services and support. The FDD also
includes required disclosure of any restrictions on the sources of
goods and services and any required purchases; a franchisee's
contractual obligations in the establishment and operation of the
franchise; the terms of any financing offered by the franchisor; the
training and assistance provided by the franchisor; the extent to which
the franchisee's outlet is protected from
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competition by the franchisor and other franchisees; any restrictions
on what the franchisee may sell; the circumstances in which the
franchise may be prematurely terminated, or the franchisee's sale or
renewal of the franchise refused by the franchisor; how and where any
disputes will be resolved; any restrictions on the franchisee's ability
to engage in the same or similar business during and after the
termination of the franchise; and the number of outlets created, sold,
and closed during the past three years. In addition, if the franchisor
makes a financial performance representation, the representation must
be disclosed in the FDD.
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\6\ 16 CFR 436.2(a).
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On March 13, 2019, the Commission solicited comments on the Amended
Rule as part of its periodic review of its rules and guides.\7\ The
Commission sought comment on a number of general issues, including
whether there is a continuing need for the Rule; what modifications, if
any, should be made to the Rule to increase its benefits to prospective
franchisees; and what modifications, if any, should be made to the Rule
to account for changes in relevant technology or economic conditions.
The Commission received 39 comments from individuals and entities
representing a wide range of viewpoints.\8\ All commenters agreed that
there is a continuing need for the Rule.\9\ Several commenters,
however, proposed changes to the Rule, including to the form and
substance of the disclosures.
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\7\ Franchise Rule, Request for Comment, 84 FR 9051 (March 13,
2019).
\8\ The comments are posted at: https://www.regulations.gov/document?D=FTC-2019-0014-0001. The Commission has assigned each
comment a number appearing after the name of the commenter and the
date of submission. This notice cites comments using the last name
of the individual submitter or the name of the organization,
followed by the number assigned by the Commission.
\9\ See, e.g., International Franchise Association, FTC-2019-
0014-0008; Congress of the United States--Members of Congress, FTC-
2019-0014-0003; North American Securities Administrators
Association, Inc., FTC-2019-0014-0032.
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II. Issues for Discussion at the Workshop
As part of the Franchise Rule regulatory review, the FTC has
decided to seek additional information about the proposed modifications
raised by the commenters. The workshop will cover such topics as:
(1) Item 19 financial performance representations;
(2) The use of disclaimers; and
(3) The format of the FDD.
An agenda will be published at a later date, in advance of the
scheduled workshop.
III. Public Participation Information
A. Workshop Attendance
The workshop is free and open to the public, and will be held
online. It will be webcast live on the FTC's website. This event may be
photographed, videotaped, webcast, or otherwise recorded. By
participating in this event, you are agreeing that your image--and
anything you say or submit--may be posted indefinitely at https://www.ftc.gov or on one of the Commission's publicly available social
media sites.
B. Requests To Participate as a Panelist
The workshop will be organized into panels, which will address the
designated topics. Panelists will be selected by FTC staff. Other
attendees will have an opportunity to comment and ask questions. The
Commission will place a transcript of the proceeding on the public
record. Requests to participate as a panelist must be received on or
before October 1, 2020, as explained in Section IV below. Persons
selected as panelists will be notified on or before October 17, 2020.
Disclosing funding sources promotes transparency, ensures
objectivity, and maintains the public's trust. If chosen, prospective
panelists will be required to disclose the source of any support they
received in connection with participation at the workshop. This
information will be included in the published panelist bios as part of
the workshop record.
C. Electronic and Paper Comments
The submission of comments is not required for participation in the
workshop. If a person wishes to submit electronic or paper comments
related to the issues discussed at the workshop, such comments should
be filed as prescribed in Section IV, and must be received on or before
December 17, 2020.
IV. Filing Comments and Requests To Participate as a Panelist
You can file a comment, or request to participate as a panelist,
online or on paper. The deadline to file a comment is December 17,
2020. For Commission staff to consider your request to participate as a
panelist, we must receive it by October 1, 2020. Write ``Franchise
Rule, 16 CFR 436, Comment, Matter No. R511003'' on your comment and
``Franchise Rule, 16 CFR 436, Request to Participate, Matter No.
R511003'' on your request to participate. Your comment--including your
name and your state--will be placed on the public record of this
proceeding, including https://www.regulations.gov.
Due to the public health emergency in response to the COVID-19
outbreak and the agency's heightened security screening, postal mail
addressed to the Commission will be subject to delay. We strongly
encourage you to submit your comments online through the https://www.regulations.gov website. To make sure that the Commission considers
your online comment, follow the instructions on the web-based form.
Because your comment will be placed on the public record, you are
solely responsible for making sure that your comment does not include
sensitive or confidential information. In particular, your comment
should not include any sensitive personal information, such as your or
anyone else's Social Security number; date of birth; driver's license
number or other state identification number, or foreign country
equivalent; passport number, financial account number, or credit or
debit card number. You are also solely responsible for making sure that
your comment does not include sensitive health information, such as
medical records or other individually identifiable health information.
In addition, your comment should not include any ``trade secret or any
commercial or financial information which . . . is privileged or
confidential''--as provided by Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in
particular competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comments to be withheld from
the public record.\10\ Your comment will be kept confidential only if
the General Counsel grants your request in accordance with the law and
the public interest. Once your comment has been posted on the https://www.regulations.gov website--as legally required by FTC Rule 4.9(b)--we
cannot redact or remove your comment from that website, unless you
submit a confidentiality request that meets the
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requirements for such treatment under FTC Rule 4.9(c), and the General
Counsel grants that request.
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\10\ See 16 CFR 4.9(c).
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Requests to participate as a panelist at the workshop should be
submitted electronically to franchiserule@ftc.gov, or, if mailed,
should be submitted in the manner detailed below. Parties are asked to
include in their requests a brief statement setting forth their
expertise in or knowledge of the issues on which the workshop will
focus as well as their contact information, including a telephone
number and email address (if available), to enable the FTC to notify
them if they are selected.
If you file your comment or request on paper, write ``Franchise
Rule, 16 CFR part 436, Comment, Matter No. R511003'' on your comment
and on the envelope or ``Franchise Rule, 16 CFR part 436, Request to
Participate, Matter No. R511003,'' on your request and on the envelope,
and mail your comment or request to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Suite CC-5610 (Annex F), Washington, DC 20580, or deliver your comment
or request to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor,
Suite 5610 (Annex F). If possible, submit your paper comment or request
to the Commission by courier or overnight service.
Visit the Commission website at https://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before December 17, 2020. The Commission will
consider all timely requests to participate as a panelist in the
workshop that it receives by October 1, 2020. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
By direction of the Commission, Commissioner Slaughter not
participating.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-20006 Filed 9-9-20; 8:45 am]
BILLING CODE 6750-01-P