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FTC adjusts franchise rule’s monetary thresholds

Joe Mont | May 19, 2016

The Federal Trade Commission announced it is adjusting three monetary exemption thresholds in its Franchise Rule. The thresholds are used to determine whether the sale of a franchise qualifies for an exemption from the rule, which requires franchisors to disclose key information prospective buyers need to evaluate the risks and benefits of investing in a franchise.

 The FTC, in accordance with the rule, is required to adjust the thresholds for inflation every four years based on the Consumer Price Index. The exemptions from compliance with the Rule that take effect on July 1, 2016, are:sales where the buyer pays less that $570 (currently $540) for the franchise; sales requiring a large investment where the franchisee pays at least $1,143,100 (currently $1,084,900), excluding the cost of unimproved land and any franchisor (or affiliate) financing; and sales to large...

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