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Countdown Begins for the Revised FTC Franchise Rule and UFOC

By ALM Staff | Law Journal Newsletters |

On Aug. 25, 2004, the Federal Trade Commission (FTC) released its long-anticipated report on its proposed changes to the FTC Rule on Franchising and Business Opportunity Ventures (FTC Rule). When the new FTC Rule comes into effect, franchisors will have to make significant changes to their existing disclosure documents and follow new rules for how and when they are delivered to prospective franchisees. There are also new exemptions for large transactions and large franchisees, and the FTC Rule will not apply to international franchise locations.

The FTC Rule has not been changed since it was originally issued in December 1978. However, in October 1999, after years of study, the FTC issued a Notice of Proposed Rulemaking (NPR) that proposed substantial revisions to the FTC Rule (Proposed Rule). The revised FTC rule as proposed in 1999 was further modified by the August staff report. This article outlines the key elements of the latest version of the Proposed Rule, which includes the recent staff report changes.

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