On Friday, July 19, 2024 the Federal Trade Commission (FTC) made several announcements targeting franchisors, including warning against the use of broad non-disparagement clauses and “hidden fees” within franchisor-franchisee contracts. These actions include:
The National Restaurant Association and Restaurant Law Center submitted comments to this RFI in June 2023. In comments, the Association urged the FTC to refrain from creating new sweeping regulations regarding the franchise model. The Association and RLC also expressed concerns regarding the RFI process wherein unreliable anonymous anecdotal accounts could be used to inform formal rulemaking. Importantly, the FTC did not revise or update the Franchise Rule, which governs what franchisors must disclose to prospective franchisees. However, these latest actions underscore the FTC’s continued scrutiny of franchising.
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