What is the purpose of Federal Trade Commission Rule 436?
What is the purpose of Federal Trade Commission Rule 436?
According to Rule 436, “The franchisee must be required to pay the franchisor (or an affiliate of the franchisor), as a condition of obtaining or commencing the franchise operation, a sum of at least $500 . . . within six months. . .” Required payments include franchise fees, royalties, or even from training fees.
What is franchise disclosure rule?
The Franchise Rule requires that franchisors provide the presale disclosure document (the “FDD”) to prospective franchisees necessary for them to make an informed decision prior to entering into a franchise relationship.
What is required in a franchise disclosure document?
Initial fees: A franchisor must disclose any fees charged to franchisees. Restrictions on sources of products and services: Covers any required purchases of goods and services, in addition to disclosing any ownership or financial relationship between the franchise and required suppliers.
What is the FTC rule?
The FTC Franchise Rule is a federal regulation which requires franchisors to prepare an extensive disclosure document and give a copy of this document to any prospective franchise purchaser.
What is the difference between licensing and franchising?
Franchises and licenses are both business agreements in which certain brand aspects are shared in exchange for a fee. However, a franchising agreement pertains to a business’s entire brand and operations, while a licensing agreement only applies to registered trademarks.
Can you negotiate franchise agreement?
Yes, franchise agreements are negotiable. Common provisions that franchisee’s negotiate before buying a franchise and signing a franchise agreement, include provisions: Extending the time to open the franchised business; and. Extending the time to cure certain franchise defaults.
What are your criteria for choosing a franchise?
You want a franchise that has a business model that drives profits. Massage Heights has formed the business model around Membership, which is a proven model for business profit. Personal interest. A vital sign that a franchise may be right for you is if you are passionate about the product or service it provides.
What are the 4 P’s of FTC?
When a company is deciding how to sell something, they look at the “Four Ps” of marketing: product, price, place, and promotion.
