What Federal Law Regulates Franchise Relationships and Franchise Disclosures?
The "Federal Franchise Rule". This federal law serves as the primary source of regulation respecting the establishment of franchise systems, the offer and sale of franchises and the mandated Franchise Disclosure Documents (FDD) that must be given to a prospective franchisee. Although the Federal Franchise Rule serves as the primary source of franchise regulation a number of states known as the franchise registration states) have established their own franchise laws which provide for the registration of FDD's and supplemental protections for franchisees. Franchisors must insure that their activities comply with both federal and state franchise laws.
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