We now have all of the requirements of the FTC’s Amended Franchise Rule being implemented.
All franchisors should be complying with the Amended Rule’s disclosure requirements, and most franchisors who have sales activities in the registration states are now doing battle with the state examiners, as they test the procedures and borders of the revised disclosure requirements. That brings to mind two topics of discussion, one of which I will address below, and the other (a look at the overall system for regulating franchise sales disclosure) I will save for another column.
Today’s subject: How are the state examiners reacting to the changes in franchise disclosure/registration?
Answer: I can’t respond to this question from the examiner’s viewpoint, but from this practitioner’s standpoint, not well.
Let me say at this point what I like to refer to as the pledge of allegiance: I have utmost admiration for the state administrators and their examiners and other staff members. They are people of integrity, and I have always felt that even though we don’t always agree with how they handle their job responsibilities, they are sincerely committed to their job, which is to protect the public from franchise fraud.
That having been said, I sense that at the moment they are making life very difficult for those of us who desire to sell franchises, or to assist our clients in so doing, consistent with the law, but in an economical, efficient manner.