FTC Franchise Rule & FTC Compliance (Part A)

If you are thinking of starting a franchise in New York, you need to be aware of the rules and regulations that are established by the Federal Trade Commission (FTC). One of the most important rules is the FTC's Rule on Franchising and Business Opportunity Ventures, which is otherwise known as the Original Rule. This was designed to fight fraud in franchise and business opportunities.

If you have questions regarding the Original Rule, you can get the professional advice of a New York franchise attorney.

What does the Original Rule establish?

The basis for the Original Rule was to establish:

•1. What is and what is not a franchise;

•2. Federally recognized exemptions from the pre-sale disclosure requirements; and

•3. The form of the pre-sale disclosure document provided to franchise and business opportunity purchasers


While the Original Rule's disclosure document has since been replaced by the Franchise Disclosure Document (FDD), the rule is generally accepted by the business and franchise community.

The FTC's New Rule for Franchising

After going through several revisions over the years, the guidelines established by the Original Rule evolved into the New Rule (2007). In the New Rule, the FTC established the new guidelines for the franchise disclosure process, which must be followed when starting a franchise in New York. In the New Rule, there are strict guidelines regarding the provision of a Uniform Franchise Offering Circular (UFOC), which is now known as the FDD.

The New Rule outlines required procedures when starting a franchise in New York, such as:

  • Exemptions for franchise fees under $500;
  • The timing and delivery of disclosures; and
  • The contents of the Franchise Disclosure Document


To ensure that you meet the requirements established in the FTC's New Rule, you can consult a New York franchise attorney. A New York franchise attorney can guide you throughout the franchise process in the interest of reducing the likelihood of your making costly mistakes.

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