[Federal Register Volume 63, Number 73 (Thursday, April 16, 1998)]
[Notices]
[Page 18920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10079]


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FEDERAL TRADE COMMISSION


Disclosure Requirements and Prohibitions Concerning Franchising 
and Business Opportunity Ventures

AGENCY: Federal Trade Commission.

ACTION: Invitation to Comment on Requested Exemption from Trade 
Regulation Rule.

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SUMMARY: The Commission is requesting public comment with respect to a 
request from Navistar International Transportation Corporation for an 
exemption from the requirements of the Franchise Rule.

DATES: Written comments will be accepted until June 15, 1998.

ADDRESSES: Comments may be filed in person or mailed to: Secretary, 
Federal Trade Commission, 6th and Pennsylvania Avenue, N.W., 
Washington, D.C. 20580. Requests for copies of the petition and the 
Franchise Rule should be directed to the Public Reference Branch, Room 
130, (202) 326-2222.

FOR FURTHER INFORMATION CONTACT:
Myra Howard, Attorney, PC-H-238, Federal Trade Commission, 6th and 
Pennsylvania Avenue, N.W., Washington, D.C. 20580, (202) 326-2047.

SUPPLEMENTARY INFORMATION: On December 21, 1978, the Federal Trade 
Commission promulgated a trade regulation rule entitled ``Disclosure 
Requirements and Prohibitions Concerning Franchising and Business 
Opportunity Ventures'' (16 CFR Part 436) (``the Rule''). In general, 
the Rule provides for pre-sale disclosure to prospective franchisees of 
important information about the franchisor, the franchise business and 
the terms of the proposed franchise relationship. A summary of the Rule 
is available from the FTC Public Reference Branch, Room 130, upon 
request.
    Section 18(g) of the Federal Trade Commission Act provides that any 
person or class of persons covered by a trade regulation rule may 
petition the Commission for an exemption from such rule, and if the 
Commission finds that the application of such rule to any person or 
class of persons is not necessary to prevent the unfair or deceptive 
act or practice to which the rule relates, the Commission may exempt 
such person or class from all or any part of the rule.
    Navistar International Transportation Corporation (``Navistar'' or 
``Petitioner'') has filed a petition for exemption from the Franchise 
rule pursuant to Section 18(g) of the Federal Trade Commission Act, 15 
U.S.C. 57a(g). Navistar's petition asserts without elaboration that its 
dealer operations are not subject to the Franchise Rule. The 
information submitted in support of the petition, however, demonstrates 
that absent an exemption, Navistar's dealer operations fall within the 
scope of the Rule.\1\
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    \1\ Navistar distributes goods associated with its trade name or 
mark (16 CFR 436.2(a)(1)(i)(A)); Navistar exerts significant control 
over, or gives significant assistance to, the dealer (16 CFR 
436.2(a)(1)(i)(B)); and Navistar requires its dealers to pay it over 
$500 within six months of the commencement of the dealer's business 
(16 CFR 436.2(a)(3)(iii)). See Petition and Letter from Navistar 
counsel to Myra Howard, Esq., FTC, dated December 8, 1997 (available 
on FTC public record).
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    Petitioner asserts that an exemption should be granted because 
Navistar dealers are sophisticated business persons with experience in 
the industry, and the information-exchange and negotiation process 
leading to execution of a dealership agreement takes place over a 
period of from four months to a year, ensuring adequate time for 
review. Petitioner also explains that ``[b]ecause it is in Navistar's 
best interest to have strong, committed and well-financed dealers, 
Navistar encourages its dealers to become fully informed prior to 
making a commitment.'' Pet. at 11. Petitioner argues that the 
experience and sophistication of prospective dealers, the company's 
selectivity generated by its interest in ensuring that its dealers will 
be committed and well-financed and the extended process leading to the 
execution of dealership agreements make the abuses identified by the 
Commission as the basis for the Franchise Rule unlikely and render 
application of the Rule to Navistar unnecessary and burdensome.
    For a complete presentation of the arguments submitted by 
Petitioner, please refer to the full text of the petition, which may be 
obtained from the FTC Public Reference Branch, Room 130, on request.
    In assessing the present exemption request, the Commission solicits 
comments on all relevant issues germane to the proceeding, including 
the following: (1) Is there evidence indicating that Petitioner may 
engage in unfair or deceptive acts or practices in the offer and sale 
of truck franchises? (2) Are there other reasons that might militate 
against granting Petitioner an exemption from the Franchise Rule?
    The Commission has considered the arguments made by Petitioner and 
concluded that further inquiry is warranted before a decision regarding 
the petition may be made. The Commission, therefore, seeks comment on 
the exemption requested by Petitioner.
    All interested parties are hereby notified that they may submit 
written data, views or arguments on any issues of fact, law or policy 
that may have some bearing on the requested exemption, whether or not 
such issues have been raised by the petition or in this notice. Such 
submissions may be made for sixty days to the Secretary of the 
Commission.
    Comments should be identified as ``Navistar Franchise Rule 
Exemption Comment,'' and two copies should be submitted.

    By direction of the Commission.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 98-10079 Filed 4-15-98; 8:45 am]
BILLING CODE 6750-01-M