Franchise Disclosures Required at New Levels

     WASHINGTON (CN) – The Federal Trade Commission has raised the financial thresholds between which franchisers are required to disclose financial information to potential franchisees about the risks and benefits of an investment.
     In 2007, the FTC adopted rules requiring that the value of a franchisee’s investment had to be between $500 and $1 million to obtain 23 specific items of information about the offered franchise including its litigation history, past and current franchisees and their contact information, any exclusive territory that comes with the franchise, assistance the franchiser provides franchisees, and the cost of purchasing and starting up a franchise.
     Under the 2007 rule, an exemption also applied to franchisees that had been in business for at least five years and had a net worth of at least $5 million.
     The new thresholds are set at $540, $1,084,900 and $5,424,500. The FTC must adjust the thresholds every four years based on the Consumer Price Index.
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