[Federal Register Volume 65, Number 173 (Wednesday, September 6, 2000)]
[Proposed Rules]
[Page 53946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22824]


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FEDERAL TRADE COMMISSION

16 CFR Part 436


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 Daewoo Motor America, Inc., for an exemption from the 
requirements of the Franchise Rule.

DATES: Written comments with be accepted until November 6, 2000.

ADDRESSES: Comments may be filed in person or mailed to: Secretary, 
Federal Trade Commission, 600 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: Steven Toporoff, Attorney, Room 238, 
Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, DC 
20580, (202) 326-3135.

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'' (``the Rule''). 16 CFR Part 436. 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, 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 or 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.
    Daewoo Motor America, Inc. (``DMA'' or ``Petitioner'') has filed a 
petition for an exemption from the Franchise Rule pursuant to Section 
18(g) of the Federal Trade Commission Act, 15 U.S.C. 57a(g). DMA's 
petition asserts that an exemption should be granted because DMA 
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 
several months, ensuring adequate time for review. Petitioner also 
explains that prospective

    Daewoo dealer[s] are highly unlikely to enter into any dealer 
agreement without a full disclosure of all material information 
needed for them to fully understand its terms. DMA will not resist 
supplying such information because its ability to succeed in the 
domestic market will ultimately depend on its dealers successfully 
selling Daewoo products according to the terms set forth in the 
Dealer Agreement.

Pet. at 10. Petitioner asserts that the experience and sophistication 
of prospective dealers and the company's selection 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 DMA 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, 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 automobile 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 
concludes 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 ``Daewoo Franchise Rule Exemption 
Comment,'' and three copies should be submitted.

List of Subjects in 16 CFR Part 436

    Franchising, Trade Practices.

    Authority: 15 U.S.C. 41--58.

By direction of the Commission.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 00-22824 Filed 9-5-00; 8:45 am]
BILLING CODE 6750-01-p