Stresses importance of setting clear goals and expectations during the pre-sale period to align franchisors and franchisees on the terms of their long-term relationship; IFA will continue working with all involved parties to modernize and improve these disclosure requirements

WASHINGTON D.C. – The International Franchise Association (IFA) today issued the following statement after the North American Securities Administrators Association (NASAA) Franchise Project Group (FPG) issued new guidance regarding the impact of shifting market conditions and economic factors on the franchisor-franchisee relationship and disclosures in the Franchise Disclosure Documents (FDDs), especially important with ongoing trade negotiations related to tariffs. The FDD provides extensive pre-sale disclosures provided to prospective franchisees:

“As trade negotiations increase costs for franchisors and franchisees alike, IFA is grateful the NASAA Franchise Project Group supported IFA’s request to recognize the challenges brands face as they navigate the unpredictable tariff environment, while striving to continue providing transparency to franchisees about the cost of doing business,” said Matt Haller, IFA President and CEO.

In the guidance, the FPG acknowledges “market and economic changes may affect various elements of the franchise law disclosure requirements that are required for FDDs and related filings,”’ including disclosures in Items 5-7, 11, and 19. While not a substitute for franchisor compliance with the requirement to amend its FDD to reflect a material change in the information disclosed, the guidance provides clarity regarding disclosure of certain information that may be vulnerable to change due to economic conditions.

In May 2024, IFA issued its own set of Responsible Franchising principles that included modernizing current disclosure requirements.

The FPG is composed of state franchise regulators who research and provide recommendations to NASAA regarding model acts, statements of policy, and commentaries related to franchise regulatory guidance. The sale of a franchise in the U.S. is governed by the Franchise Rule, a federal regulation enforced by the FTC, as well as state registration and disclosure laws.

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About the International Franchise Association:

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 830,000 franchise establishments that support nearly 8.8 million direct jobs, $896.9 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.