Franchise Rule Protecting Franchisees, Government Study Finds


Washington, DC-A report issued by the U.S. GeneralAccounting Office (GAO) confirmed that the Federal Trade Commission(FTC) is effectively enforcing its regulation that protects thosewho invest in franchised businesses.

The GAO report noted that over the seven-year period from 1993to 1999, only 20 cases involving franchises were determined seriousenough by the FTC to warrant court action. The agency obtained someform of relief for investors in all cases.

"The GAO report confirms what we've known for sometime-that there are no systematic problems with franchising thatrequire government solutions," Don DeBolt, president of theInternational Franchise Association, says. "The franchisingsector is doing a very effective job of self-regulation and theFederal Trade Commission is enforcing the Trade Regulation onFranchising and Business Opportunities."

DeBolt says the report also reassures Congress that there is noneed for federal legislation to regulate relationships betweenfranchisees and franchisors.

The isolated incidences of franchise relationship problems, thereport says, do not justify the FTC conducting a more widespreadinvestigation of relationship issues or developing a new rule thataddresses the terms and conditions of franchise contracts.

"According to FTC staff, data the FTC has collected, whilelimited, suggests that franchise relationship problems are isolatedoccurrences rather than prevalent practices," the GAO reportstates. -International Franchise Association

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