in

Antitrust Regulator Tells Chains: Back Off Your Franchisees

After a yearlong inquiry, the Federal Trade Commission warned brands not to gag their small business operators or charge them extra fees.

In the long-simmering conflict between franchisers and franchisees, the federal government has weighed in on behalf of the smaller guys.

In a business relationship that has become fundamental to American commerce, franchisers — brands like McDonald’s and Jiffy Lube — license the right to operate their concept to individual entrepreneurs, who provide start-up capital and may own one location or many.

On Friday, the Federal Trade Commission issued a policy statement and staff guidance that cautioned franchisers not to restrict their franchisees’ ability to speak to government officials or to tack on fees that weren’t disclosed in documents provided to prospective franchise buyers.

In a news release, the commission said it was acting amid “growing concern about unfair and deceptive practices by franchisers — to ensure that the franchise business model remains a ladder of opportunity to owning a business for honest small business owners.”

The agency has been scrutinizing the industry, which includes 800,000 business establishments, since issuing a request for information early last year that asked several questions about the franchisee-franchiser relationship. Around the same time, the Government Accountability Office issued a report finding that franchisees lacked control over crucial business decisions and that they often did not understand all the risks they faced before purchasing a license.

Across the more than 2,200 comments posted in response to the F.T.C. request, a central theme emerged: A majority of franchisees wanted changes to the rules that governed the industry, while a majority of franchisers did not.

We are having trouble retrieving the article content.

Please enable JavaScript in your browser settings.


Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.


Thank you for your patience while we verify access.

Already a subscriber? Log in.

Want all of The Times? Subscribe.

Source: Economy - nytimes.com


Tagcloud:

Samson Mow Shares Epic Take as Bitcoin Holds $57,000, ‘Everything is Accelerating’

The economic challenge for Labour