[Federal Register Volume 88, Number 21 (Wednesday, February 1, 2023)]
[Notices]
[Pages 6727-6729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01997]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request; Extension

AGENCY: Federal Trade Commission.

ACTION: Notice.

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SUMMARY: In accordance with the Paperwork Reduction Act of 1995 
(``PRA''), the Federal Trade Commission (``FTC'' or ``Commission'') is 
seeking public comment on its proposal to extend for an additional 
three years the Office of Management and Budget (``OMB'') clearance for 
information collection requirements in its Trade Regulation Rule on 
Disclosure Requirements and Prohibitions Concerning Franchising 
(``Franchise Rule'' or ``Rule''). That clearance expires on November 
30, 2023.

DATES: Comments must be filed by April 3, 2023.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Franchise Rule, PRA 
Comment, FTC File No. P094400,'' on your comment, and file your comment 
online at https://www.regulations.gov by following the instructions on 
the web-based form. If you prefer to file your comment on paper, mail 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex J), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT: Christine M. Todaro, Attorney, 
Division of Marketing Practices, Bureau of

[[Page 6728]]

Consumer Protection, 600 Pennsylvania Ave. NW, CC-8548, Washington, DC 
20580, (202) 326-3711, [email protected].

SUPPLEMENTARY INFORMATION: 
    Title of Collection: Franchise Rule, 16 CFR part 436.
    OMB Control Number: 3084-0107.
    Type of Review: Extension without change of currently approved 
collection.
    Affected Public: Private Sector: Businesses and other for-profit 
entities.
    Estimated Annual Burden Hours: 22,480.
    Estimated Annual Labor Costs: $8,386,800.
    Estimated Annual Non-Labor Costs: $4,800,000.
    Abstract: The Franchise Rule ensures that consumers who are 
considering a franchise investment have access to the material 
information they need to make an informed investment decision and 
compare different franchise offerings. The Rule requires franchisors to 
furnish prospective purchasers with a Franchise Disclosure Document 
(``FDD'') that provides information relating to the franchisor, its 
business, the nature of the proposed franchise, and any representations 
by the franchisor about financial performance regarding actual or 
potential sales, income, or profits. The Rule also requires that 
franchisors maintain records to facilitate enforcement of the Rule.\1\ 
The franchisor must preserve materially different copies of its FDD for 
3 years, as well as information that provides a reasonable basis for 
any financial performance representation it elects to make.
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    \1\ The Rule was amended in 2007 to conform its disclosure 
requirements with the disclosure format accepted by states that have 
franchise registration or disclosure laws. See 72 FR 15444 (Mar. 30, 
2007). The amended Rule has significantly minimized any compliance 
burden beyond what is required by state law.
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    Under the PRA, 44 U.S.C. 3501--3521, federal agencies must obtain 
approval from OMB for each collection of information they conduct or 
sponsor. ``Collection of information'' means agency requests or 
requirements that members of the public submit reports, keep records, 
or provide information to a third party. See 44 U.S.C. 3502(3); 5 CFR 
1320.3(c). As required by section 3506(c)(2)(A) of the PRA, 44 U.S.C. 
3506(c)(2)(A), the FTC is providing this opportunity for public comment 
before requesting that OMB extend the existing clearance for the 
information collection requirements contained in the Franchise Rule, 16 
CFR part 436 (OMB Control No. 3084-0107).

Burden Statement

    Estimated Annual Hours Burden: 22,480.
    FTC staff estimates that there are approximately 4,000 sellers of 
franchises covered by the Rule, with approximately 6% (240) of that 
total reflecting an equal amount of new and departing business 
entrants.\2\ FTC staff estimates that the average annual disclosure 
burden for established franchisors to update existing disclosure 
documents will be three hours per seller for a total of 11,280 hours 
(3,760 franchisors x 3 hours). For new sellers of franchise 
opportunities, FTC staff estimates that the preparation of disclosure 
documents will require approximately 30 hours for a total of 7,200 
hours (240 new franchisors x 30 hours).
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    \2\ Some franchise offerings may qualify for the exemptions 
listed in 16 CFR 436.8. Thus, this estimate may overestimate the 
number of franchisors subject to the Rule.
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    Covered franchisors also may need to maintain an alternative 
version of the FDD for use in non-registration states, which may differ 
from FDDs used in registration states. FTC staff estimates that this 
recordkeeping obligation would require approximately one hour per year. 
This results in an additional burden of 4,000 hours (4,000 franchisors 
x 1 hour). Under the Rule, a franchisor is also required to retain 
copies of receipts of disclosure documents, as well as materially 
different versions of its disclosure documents. Such recordkeeping 
requirements, however, are consistent with, or less burdensome than, 
those imposed by the states that have franchise registration and 
disclosure laws. Accordingly, FTC staff believes that incremental 
recordkeeping burden, if any, would be de minimis.
    Estimated Annual Labor Costs: $8,386,800.
    Labor costs are derived by applying estimated hourly cost figures 
to the burden hours described above. FTC staff anticipates that an 
attorney will prepare required disclosure documents at an estimated 
hourly attorney rate of $450.\3\ For established franchisors, FTC staff 
estimates the following annual labor costs: $1,350 per established 
franchisor (3 hours x $450) for a total annual cost burden of 
$5,076,000 ($1,350 x 3,760 established franchisors). For new 
franchisors, this yields an annual cost of $13,500 per new franchisor 
(30 hours x $450) for a total annual cost burden of $3,240,000 for new 
franchisors ($13,500 x 240 new franchisors).
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    \3\ It is staff's understanding that franchisors often hire 
outside counsel to prepare the required disclosures, and outside 
counsel is typically compensated at a higher rate than in-house 
attorneys.
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    Additionally, FTC staff anticipates that recordkeeping under the 
Rule will be performed by clerical staff at approximately $17.70 per 
hour.\4\ Thus, based on the 4,000 hours of recordkeeping burden per 
year for all covered franchisors, this will amount to a total annual 
labor cost of $70,800 ($17.70 x 4,000 hours).
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    \4\ Based on Bureau and Labor Statistics' Occupational 
Employment and Wages, May 2021, National Estimates for File Clerks, 
available at https://www.bls.gov/oes/current/oes434071.htm.
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    Estimated Annual Non-Labor Costs: $4,800,000.
    FTC staff estimates that the non-labor burden incurred by 
franchisors differs based on the length of the disclosure document, the 
number produced, and the method of distribution employed by 
franchisors. FTC staff estimates that the estimated 4,000 sellers of 
franchise opportunities distribute approximately 100 disclosure 
documents each annually for a total of 400,000 disclosure documents. 
FTC staff estimates that 80% of these disclosure documents (320,000) 
are distributed electronically at a cost of $5 per electronic 
disclosure. This results in a total estimated $1,600,000 (320,000 x $5) 
in non-labor costs for electronic disclosure. FTC staff estimates that 
the remaining 20% of disclosure documents (80,000) are distributed in 
hard copy at a cost of $40 each for printing and mailing costs. This 
results in a total estimated non-labor cost burden associated with 
printing and mailing disclosure documents of $3,200,000 (80,000 x $40).

Request for Comment

    Pursuant to Section 3506(c)(2)(A) of the PRA, the FTC invites 
comments on: (1) whether the disclosure and recordkeeping requirements 
are necessary, including whether the information will be practically 
useful; (2) the accuracy of our burden estimates, including whether the 
methodology and assumptions used are valid; (3) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(4) ways to minimize the burden of the collection of information, 
including through the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology, e.g., permitting electronic submission of 
responses.
    For the FTC to consider a comment, we must receive it on or before 
April 3, 2023. Your comment, including your name and your state, will 
be placed on

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the public record of this proceeding, including the https://www.regulations.gov website.
    You can file a comment online or on paper. 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 encourage you to submit your comments 
online through the https://www.regulations.gov website.
    If you file your comment on paper, write ``Franchise Rule, PRA 
Comment, FTC File No. P094400,'' on your comment and on the envelope, 
and mail it to the following address: Federal Trade Commission, Office 
of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex J), Washington, DC 
20024. If possible, submit your paper comment to the Commission by 
courier or overnight service.
    Because your comment will become publicly available at https://www.regulations.gov, you are solely responsible for making sure that 
your comment does not include any 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 
any 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 (1) be filed in paper form, (2) be clearly labeled 
``Confidential,'' and (3) 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 comment to be withheld from 
the public record. See FTC Rule 4.9(c). 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 publicly at www.regulations.gov, we cannot redact or remove 
your comment unless you submit a confidentiality request that meets the 
requirements for such treatment under FTC Rule 4.9(c), and the General 
Counsel grants that request.
    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 April 3, 2023. 
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.

Josephine Liu,
Assistant General Counsel for Legal Counsel.
[FR Doc. 2023-01997 Filed 1-31-23; 8:45 am]
BILLING CODE 6750-01-P