The Federal Trade Commission (FTC) has recently requested public comment 
on how franchisors exert control over their franchisees and their franchisee’s workers. The FTC’s aims to gather information on this issue and to potentially update the its Franchise Rule. In a recent press release, the FTC highlighted the importance of franchise relationships and the need for stakeholders to provide feedback on these issues.
The FTC seeks public comment on a range of issues related to franchising, including the use of technology to monitor and control franchisees, the impact of joint employment on franchise relationships, and the adequacy of current franchise disclosure requirements. By gathering information on these issues, the FTC hopes to identify areas where improvements can be made.
According to the press release, the FTC is particularly interested in feedback on the use of technology to monitor and control franchisees–a growing issue in the franchise industry, as franchisors increasingly rely on technology to oversee their franchisees’ operations. The FTC seeks feedback on how franchisors use technology to monitor and control franchisees, and whether franchisees are given adequate notice and opportunity to object to these practices.
The FTC also seeks feedback on joint employment issues, which has become a significant concern for franchisors. Franchisors may be held liable for the employment practices of their franchisees, and the FTC seeks on how this issue should be addressed in the Franchise Rule.
Finally, the FTC seeks feedback on the adequacy of franchise disclosure requirements. A Franchise Disclosure Document (FDD) is an important tool for protecting franchisees, as it provides franchisees with information about the risks and benefits of entering into a franchise agreement. The FTC seeks input on whether current disclosure requirements are sufficient, and whether additional disclosures should be required to ensure that franchisees are fully informed about the terms of their franchise agreement.
The FTC’s request for public comment could lead to significant changes in the franchise industry. Both franchisees and franchisors should be aware of the potential changes to the Franchise Rule, including increased disclosure requirements, changes to joint employment rules, and more detailed requirements around the use of technology.