Prohibit franchisor selling

... By Liz Dillon from Gray Plant Mooty Only english version available (Spanish version translated by Josan Garcia in process) Federal franchising laws in the U.S. prohibit a franchisor from selling a franchise to a prospective franchisee before complying with certain disclosure requirements. Before delivering the FDD, the franchisor must simply advise a prospect of available disclosure formats, and any requirements for obtaining and reviewing disclosure in a particular format. Most importantly, the Amended Rule requires a franchisor to disclose annually in Item 3 all franchisor-initiated litigation involving the franchise relationship filed during the previous fiscal year. While franchisor-initiated litigation must be “material,” the FTC intends to view materiality from the reasonable prospective franchisee’s vantage point. The disclosure of franchisor-initiated litigation is meant to cover a snapshot in time, and is not required to be updated. 4. ...