Introduction
A franchisor attempting to sell franchises in the United States must comply with a patchwork of federal and state laws that regulate franchising. These involve detailed disclosure of the franchise opportunity at the federal level, as well as registration or notice filing requirements and additional disclosure obligations at the state level. While this update does not purport to provide an exhaustive overview of the interplay between these federal and state laws, it is intended to provide franchisors with a basic understanding of the purpose and scope of these laws – a necessary component of any US expansion plan.Federal regulation
Amended FTC rule
To enable prospective franchisees to make informed decisions and to protect against fraudulent franchise sales practices, pursuant to authorization from the US Congress, in 1979 the Federal Trade Commission (FTC) promulgated its rule on the disclosure requirements and prohibitions concerning franchising and business opportunity ventures for the regulation of franchise systems in America.(1) Read full article.