WASHINGTON (Legal Newsline) — The Federal Trade Commission (FTC) has announced it has adjusted three monetary exemption thresholds for
inflation in its Franchise Rule.
The Franchise Rule mandates that franchisors disclose key
information to prospective buyers as it relates to the risks and benefits of
investing. The FTC uses thresholds to decide whether the sale of a franchise
qualifies for exemptions from the rule.
Every four years, the FTC adjusts the threshold level to
deal with inflation based on the Consumer Price Index. As of July 1 of this
year, the new thresholds for exemption will take place.
If a buyer pays less than $570 for the franchise, the sale
will be eligible for exemption. On the other end of the spectrum, if the sale
requires a large investment where the franchisee pays at least $1,143,100, the
sale will be eligible for exemption. The final exemption comes when a sale is
made to large entities, such as multi-unit franchisees, airports, hospital and
universities. These entities must have been in business for at least five years
and have a net worth of at least $5,715,500.
The FTC voted 3-0 to approve the Federal Register Notice. The notice is available on the FTC's website.