In issuing a narrowly tailored final rule, Commission scales back original one-size-fits-all approach that failed to consider adverse economic impact to franchised businesses across industries, reflects concerns raised by IFA in comments and testimony during rulemaking process

WASHINGTON – The International Franchise Association (IFA) today released the following statement after the Federal Trade Commission (FTC) issued its final rule on Unfair and Deceptive Fees, commonly known as the “Junk Fee” Rule:

“IFA is pleased that the FTC heeded our concerns about the initial draft of the rule, which could have inflicted unnecessary and far-reaching economic harm,” said Michael Layman, IFA Chief Advocacy Officer. “As originally written, the overly broad proposed rule would cause consumer confusion and hurt franchised small businesses in the restaurant, retail, and health and fitness industries, among others. We are encouraged by incoming Chair Andrew Ferguson’s position that the time for rulemaking under the current FTC has come to an end, as well as his and Commissioner Holyoak’s commitment to narrowly tailored rulemaking supported by empirical data and economic research, rather than the proposed rule that failed to consider the adverse impact to many franchise businesses. We look forward to working with the incoming FTC to support narrowly tailored policymaking where the rulemaking record demonstrates a need for the policy, as well as modernizing the Franchise Rule so franchising can continue powering economic growth.”

In February 2024, IFA submitted comments to the FTC and testified before an administrative law judge to make known its concerns about the FTC’s failure to demonstrate that itemized pricing in certain industries common in franchising, such as restaurants, nail salons, gyms and massage studios, is inherently deceptive and unfair and can hurt consumers and small businesses alike.

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