HCAOA Teaming Up with IFA, Franchisors to Develop Comments for FTC

​Recently, the Federal Trade Commission issued a ​Request for Information (RFI) soliciting public comments on various issues pertaining to the franchisor-franchisee relationship. Through this RFI, the FTC is interested in learning more about how franchisors exert control over franchisees and their employees. HCAOA, the International Franchise Association, and a coalition of franchisors within the home care space are working together on a comment, which is due June 8. HCAOA will continue to update members on this issue. 

Specifically, the FTC is interested in how franchisors disclose certain aspects and contractual provisions of the franchise relationship whether it be in Franchise Disclosure Documents, franchise agreements, operating manuals, or elsewhere. In addition, this Request for Information seeks information about the scope, application, and effect of certain contractual provisions and aspects of the franchise relationship.
 
As part of the Request for Information, the FTC is asking franchisors, franchisees, current and past employees of franchisors and franchisees, government entities, economists, attorneys, academics, consumers, and other interested parties to weigh in on a wide array of issues that affect franchisees and their workers, such as:
 

• franchisees’ ability to negotiate the terms of franchise agreements before signing, and the ability of franchisors to unilaterally make changes to the franchise system after franchisees join;
• franchisors’ enforcement of non-disparagement, goodwill or similar clauses;
• the prevalence and justification for certain contract terms in franchise agreements;
• franchisors’ control over the wages and working conditions in franchised entities, other than through the terms of franchise agreements;
• payments or other consideration franchisors receive from third parties (e.g., suppliers, vendors) related to franchisees’ purchases of goods or services from those third parties;
• indirect effects on franchisee labor costs related to franchisor business practices; and
• the pervasiveness and rationale for franchisors marketing their franchises using languages other than English.