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The GPMemorandum, Supplement to Issue 95

January 01, 2007 | Alert

The Federal Trade Commission announced today its long-awaited approval of final amendments to the Franchise Rule.  Highlights from the FTC’s announcement include the following:

  • Optional Compliance:  Franchisors may elect to follow the amended Rule on a voluntary basis beginning July 1, 2007.
     
  • Mandatory In July 2008:  Franchisors must comply with the amended Rule beginning July 1, 2008.
     
  • Streamlined Sales: The amended Rule provides for the use of new technologies in franchise marketing, such as electronic disclosure, and eliminates broker disclosures.
     
  • New Disclosures Required:  It will require more extensive disclosures in certain areas—including lawsuits against franchisees, the existence of franchisee associations, and warnings when there is no exclusive territory.
     
  • Business Opportunity Rule Separated:  The amended Rule formally separates regulation of business opportunities into a separate rule.  Proposed amendments to the business opportunity rule are currently under consideration, but have not been published yet.
     
  • Compliance Guide:  The FTC staff plans to prepare a Compliance Guide by July of this year to help with understanding and applying the changes to the UFOC Guidelines.
     
  • State Law:  Although the amended Rule will set the new “floor” for required disclosures, individual states may impose additional or more stringent requirements in addition to those contained in the FTC’s amended Rule.
     

For the full text of the FTC’s announcement regarding the Franchise Rule, see http://www.ftc.gov/news-events/press-releases/2007/01/ftc-issues-updated-franchise-rule.

After we have digested the entire text of the amended Rule, we will distribute a special edition of the GPMemorandum containing a more thorough summary of the most significant changes announced today.


ATTORNEYS WHO WROTE OR EDITED ARTICLES FOR THIS ISSUE INCLUDE:

John F. Fitzgerald,  Gaylen L. Knack, Craig P. Miller, Kevin J. Moran, Quentin R. Wittrock.

For more information on our Franchise and Product Distribution Practice and for recent back issues of this publication, visit the Franchise and Product Distribution group page.

GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A.

500 IDS Center
80 South Eighth Street
Minneapolis, Minnesota  55402-3796
Phone:  612-632-3000
Fax:  612-632-4444

2600 Virginia Avenue, N.W.
Suite 1111 - The Watergate
Washington, DC 20037-1905
Phone: 202-295-2200
Fax: 202-295-2250

franchise@gpmlaw.com

The GPMemorandum is a periodic publication of Gray, Plant, Mooty, Mooty & Bennett, P.A., and should not be construed as legal advice or legal opinion on any specific facts or circumstances.  The contents are intended for general information purposes only, and you are urged to consult your own franchise lawyer concerning your own situation and any specific legal questions you may have.

 

This article is provided for general informational purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. You are urged to consult a lawyer concerning any specific legal questions you may have.

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