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FTC Adding to the Franchise Rule

FTC Adding to the Franchise Rule
Author: Lance Winslow

Last summer the FTC put forth a report and then asked for comments on modifications of the franchise rule. There has been no real significant changes since the 1970’s, but lots of opinions and case law along the way. All these complications of rules and the rules proposed today by the Federal Trade Commission do not help franchisors remain efficient or franchisees sell more pizza, hamburgers or donuts.

Franchising is not about laws as much as delivering goods and services to people in an expeditious and efficient manner. Franchisors need to concentrate on markets and the Federal Trade Commission on trends and keeping markets free, free from barriers to entry, free from abuse of power and help maintain free flow to such markets. The FTC is not the FBC Federal Bureaucracy Creator. If the Federal Trade Commission is going to referee, that is fine and will continue to serve our nation as it was intended, but changing the rules half way through the franchise game is hurting the industry not helping it.

No harm has occurred, so no fouls are needed, franchising has the lowest fraud statistic rate of any industry, so low in fact that they have to create fraud and label honest franchisors fraudulent to maintain self worth of that department of the agency. The Federal Trade Commission enforcement division is simply not needed on the field running up and down the courts blowing whistles on every play. Now we have private attorneys sitting on the sidelines hooking athletes as they run for touch-downs in new evolving plays in industries never franchised before. Like a DC Sniper shooting at an executive on his way to work or like the unruly fans spitting in the face of Lance Armstrong as he nears the finish line, screaming; “Don’t come back next year, give someone else a chance to win!” Free markets must remain competitive to serve the common good of the citizen, country, economy, consumer and in this case the franchise community.

By Lance Winslow