FTC Warns Franchisors of ‘Unfair and Deceptive’ Practices Imposed on Franchisees

The Federal Trade Commission is warning franchisors against using “unfair and deceptive practices” against franchisees, following a yearlong investigation that found some franchisors inappropriately limited franchisees’ ability to speak to regulators and imposed previously undisclosed fees.

“Franchisee reports and voluntary interviews are a critical component of FTC investigations,” the FTC said in its policy statement Friday. “If franchisees are unwilling or unable to file reports and discuss their experiences, the FTC’s ability to protect them is weakened. In addition, the competitive and consumer protection benefits that flow from the franchise business model are compromised.”