IFA Urges FTC to Exclude Franchises from Earnings Claims Rule

May 11, 2022

Says new rule is duplicative and potentially conflicting with existing regulatory requirements for franchised businesses

WASHINGTON, May 11, 2022 – In new comments submitted to the Federal Trade Commission (FTC) on the “Deceptive or Unfair Earnings Claims” rulemaking, the International Franchise Association (IFA) urged the Commission to exclude franchised businesses from duplicative and potentially conflicting regulatory requirements under the proposed rule.

IFA’s Senior Vice President of Government Relations and Public Affairs Michael Layman says, “The IFA strongly supports the goal of protecting prospective entrepreneurs from false and misleading claims by bad actors, which is why we support the FTC Franchise Rule currently under decennial review at the Commission. We believe that the proposed Earnings Claims Rule should not apply to franchised businesses that are already regulated under the Franchise Rule, and we encourage the Commission to exclude these small businesses from duplicative and potentially conflicting regulatory requirements.”

Layman highlights that the franchise sector is already highly regulated at both the federal and state level, in contrast to the treatment of other less regulated sectors. He adds, “IFA does not believe that an additional layer of regulation under the Earnings Claim Rule, as applied to businesses already regulated by the Franchise Rule, is necessary or that such added oversight would be useful to prospective franchisees... Indeed, the stark contrast between the Commission’s focus on earnings claims in sectors such as the unregulated gig economy and the already-regulated franchise sector could not be more clear.”

The comments specifically address two questions, about whether businesses regulated under the FTC Franchise Rule should be included in this rulemaking and whether the Franchise Rule should be amended if the Earnings Claim Rule is adopted. Layman writes that the matters at hand “should be discussed and addressed in the context of the Franchise Rule regulatory review process.”

The full comments are available here.

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 775,000 franchise establishments that support nearly 8.2 million direct jobs, $787.7 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.


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