FTC Franchise Rule Amendment Takes Effect Next Month

The monetary thresholds that determine when and if the sale of a franchise business is exempt from the Federal Trade Commission’s (FTC) Franchise Rule are changing once again. Based on the ever-fluctuating Consumer Price Index and reassessed every four years as required by The Rule, the three exemptions clarify which franchise sellers are required to disclose certain information to help prospective buyers weigh the risks and benefits of their investment.

The most current inflation adjustments will take effect on July 1, 2012, and will exempt:

• Sales where the buyer’s initial payment is less than $540 (up from $500).

• Sales where the initial investment is at least $1,084,900 (up from $1 million), excluding unimproved land costs and franchisor/affiliate financing, and

• Sales to large entities that have been in business for five years or more and have a net worth of at least $5,424,500 million (up from $5 million).

To read the Franchise Rule’s newest amendment, click here now! And if you’d like to access the FTC’s most current Franchise Rule Compliance Guide, you can find it online.

By admin

0 REQUEST INFO