The Franchise Group of the Consumer Division of the Federal Trade Commission is not well known to consumers or the public. Franchises in the United States account for a third of every dollar spent by consumers and 400,000 points of sale or stores. The Federal Trade Commission looks at the franchise industry. Some franchisors believe that the FTC desperately needs a change in the franchise division. Some attorneys who make money suing franchisors on behalf of franchisees and vendors like things as they are and realize that any change would tip the balance and lose revenue in a highly litigious and well-paying sector of the law.

An attorney we interviewed said in an email: “Well, I have to, very respectfully, disagree. Franchising has a good and competent friend at the FTC, and particularly Steve Toporoff, who has primary responsibility for the FTC in this area”.

However, the franchise community also knows that while he was in command there were no changes to the FTC Franchise Rule for over 10 years and this caused further difficulties for franchisors creating jobs, tax base and economic vitality, which are important for a healthy economy. Now that the FTC has totally screwed up the franchise rules in our country and tipped the field in favor of no franchisor or franchisee, not free markets of free economies, but lawyers to make more money due to incessant over-regulation; These same attorneys want to export these same ridiculous rules to other countries as well, thus giving our attorneys influence and opening new markets for them.

A lawyer testified; “I think the FTC, in general, does an excellent job, at least in the area of ​​franchising, which is the only field in which I have any significant experience. Also, the new proposed rule is, again generally, a clear give a step towards more rational and effective franchise disclosure, and may well serve as a model for other countries’ attempts at rational regulation in this area. “

The current disclosure laws, which are mandatory, are a set of more than 200 pages of disclosure documents that are given to franchise buyers prior to purchase. Each paragraph of all required disclosure is open to interpretation of the law and possible lawsuits. Lawyers call this ‘rational regulation’, I call it a windfall for them. There are few or no complaints about franchises in the industry. Even the complaints, which usually come in, are not real, just someone trying to get something for nothing. Most lawyers believe that it is a good system, however, not perfect, they admit, but a good system. Good for who? Good for them, of course. Many franchisors have made their feelings known, here is an example of some of their comments;

http://www.ftc.gov/os/comments/franrulestaffrpt/OL-100001.pdf

The lack of changes in the laws has helped increase franchise lawsuits over the years, and instead of reducing regulation and paperwork, these new sets of laws are going to increase it. More laws and rules mean more lawsuits, of course. A lawyer commented on this thought stating;

“While in a perfect world it might have been nice if the FTC Franchise Rule rewriting process had moved more quickly, we should be realistic and keep in mind that franchising is not the top priority. from the FTC, perhaps due to the relatively low number of complaints it receives from franchisees or others, compared to the large role franchises play in the American economy. “

These attorneys are busy arguing with government regulators and often get the inside story, but if a franchisor calls to criticize or point out flaws in the law, they never get a response phone call and, if they can get through, they often do. make. ‘hung up’ during the conversation when they try to explain their points. Why do lawyers have full access to government regulators and yet entrepreneurs who are responsible for everything in the world cannot get through? An attorney who spoke about the FTC stated:

“I remember a conversation I had at a breakfast with one of the FTC commissioners a few years ago in which I asked her if she saw any significant problems with the franchises. After a few moments to think, she answered no, other than possible. problems related to the overlapping of both state and federal regulation. “

Interesting, but if there are no franchise issues, why don’t we have lowered regulations? The same lawyer goes on to say:

“So for me, the FTC has done a good job of enacting and reviewing the Franchise Rule over the years, particularly given that there are other areas that concern them much more, such as Bus. Opp. Fraud, financial privacy of the consumer, the National Do Not Call Registry, the regulation of Truth in Advertising, the supervision of corporate mergers, etc. “

“We shouldn’t let our focus on franchising go local and forget that our field is just a small part of the big picture, at least from the FTC’s point of view and probably from the regulators’ point of view in general. It’s probably a tribute to the relatively good health of the franchises that we don’t receive more regulatory attention than we do. “

Again, the attorney seems to indicate that franchising is a small part of the FTC’s agenda and so don’t worry, you like things the way they are. Of course you do, you are making money at the expense of franchisees and franchisors across America, why would you want anything to change? America, we need regulatory reality check and we need it now. Think about it.