First-time the FTC has enforced the Franchise Rule against a third-party franchise seller

WASHINGTON – The International Franchise Association (IFA) today released the following statement on the settlement between the Federal Trade Commission (FTC), Premier Franchising Group, and Franchise FastLane. This is the first time the FTC has pursued an enforcement action against a third-party franchise sales organization for an alleged violation of the Franchise Rule.

“IFA applauds the FTC’s action, which makes clear that the Franchise Rule applies to everyone involved in selling a franchise, including franchise sales organizations and other third-party franchise sellers,” said Matt Haller, IFA president and CEO. “Every prospective franchisee deserves a full and accurate picture of their investment, the risks, and the people involved so they can effectively do their due diligence before making a decision, while brands and their sales agents have a shared interest in that responsibility to ensure franchisor-franchisee relationships are established on a foundation of transparency.

“Franchise sales organizations and franchise brokers can be a vital part of the franchise ecosystem by connecting prospective franchisees with brands where there is mutually a good fit for each party, but the current regulatory landscape allows for too many connections that are a poor fit. With the proliferation of new franchise brands and interest in franchise ownership in recent years, a modernized franchise disclosure regime is long overdue, as well as the resources to the FTC to increase enforcement to hold all stakeholders accountable. This is why IFA continues to call for modernizing the Franchise Rule along with improving the state franchise registration process.

“IFA also continues to strengthen voluntary education and compliance, including the development of a third-party franchise seller education curriculum modeled after our Certified Franchise Executive program and sales compliance training, Fran-Guard.

“Chairman Ferguson and Director Mufarrige committed to enforcing existing law rather than writing new rules, and they have delivered. We thank them for working with the franchise community and holding a high bar for accountability.”

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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 more than 832,000 franchise establishments that support nearly 8.8 million direct jobs, $907.3 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.