[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

[[Page 55851]]

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 [email protected], 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