Disclosure Requirements and Prohibitions Concerning Franchising
| Citation | 85 FR 38790 |
| Record Number | 2020-12617 |
| Published date | 29 June 2020 |
| Section | Rules and Regulations |
| Court | Federal Trade Commission |
Federal Register, Volume 85 Issue 125 (Monday, June 29, 2020)
[Federal Register Volume 85, Number 125 (Monday, June 29, 2020)]
[Rules and Regulations]
[Pages 38790-38791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12617]
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FEDERAL TRADE COMMISSION
16 CFR Part 436
Disclosure Requirements and Prohibitions Concerning Franchising
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'')
announces revised monetary thresholds for three exemptions from the
Franchise Rule. The FTC is required to adjust the size of the monetary
thresholds every fourth year based upon changes in the Consumer Price
Index for All Urban Consumers (``CPI-U'') published by the Department
of Labor.
DATES: This final rule is effective on July 1, 2020.
FOR FURTHER INFORMATION CONTACT: Christine M. Todaro, Attorney,
Division of Marketing Practices, Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580;
phone number: (202-326-3711), email address: [email protected].
SUPPLEMENTARY INFORMATION: The FTC's Trade Regulation Rule entitled
``Disclosure Requirements and Prohibitions Concerning Franchising''
(Franchise Rule or Rule) \1\ provides three exemptions based on a
monetary threshold: The ``minimum payment exemption,'' \2\ the ``large
franchise investment exemption'' \3\ and the ``large franchisee
exemption.'' \4\ The Rule requires the Commission to ``adjust the size
of the monetary thresholds every fourth year based upon the . . .
Consumer Price Index for all urban consumers [CPI-U] published by the
Department of Labor.'' \5\ This requirement, added by the 2007
amendments to the Rule, took effect on July 1, 2007, so that
franchisors would have a one-year phase-in period within which to
comply with the amended Rule's revised disclosure requirements before
the July 1, 2008, final compliance deadline.\6\
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\1\ 16 CFR part 436.
\2\ 16 CFR 436.8(a)(1).
\3\ 16 CFR 436.8(a)(5)(i).
\4\ 16 CFR 436.8(a)(5)(ii).
\5\ 16 CFR 436.8(b).
\6\ 72 FR 15444 (Mar. 30, 2007).
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As required by the Rule, the Commission previously revised the
three monetary thresholds to reflect inflation in the CPI-U in 2012 and
2016.\7\ The Commission bases the exemption monetary thresholds that
will take effect on July 1, 2020, on the increase in the CPI-U between
2007 and 2019. During this period, the annual average value of the
Consumer Price Index for all urban consumers and all items increased by
23.3%--from an index value of 207.342 to a value of 255.657.\8\
Applying the percentage increase to the three monetary thresholds
increases the thresholds as follows:
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\7\ 77 FR 36149, 36150 (June 18, 2012); 81 FR 31500 (May 19,
2016).
\8\ Bureau of Labor Statistics, Consumer Price Index: Historical
Consumer Price Index for All Urban Consumers (CPI-U), available at
https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-201912.pdf.
[[Page 38791]]
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Adjusted 2020
Exemption 2007 Base Threshold
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Minimum Payment......................... $500 \9\ $615
Large Franchise Investment.............. 1,000,000 1,233,000
Large franchisee........................ 5,000,000 6,165,000
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Because the calculation of these thresholds is purely ministerial
in nature and implements the Rule's mandatory adjustment mechanism,
these adjustments are exempt from the rulemaking procedures specified
in section 18 of the FTC Act.\10\ In addition, the Commission has
determined that notice and comment are unnecessary under the
Administrative Procedure Act (``APA'') for the same reason. The
Commission, therefore, has omitted notice and comment for good cause as
provided by section 553(b)(B) of the APA.\11\ For this reason, the
requirements of the Regulatory Flexibility Act also do not apply.\12\
Accordingly, the adjusted thresholds will take effect on July 1, 2020.
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\9\ The Commission has rounded this figure from $616.50 to $615
to facilitate compliance and for clarity.
\10\ See 15 U.S.C. 57a(d)(2)(B); 16 CFR 1.15(b) (providing that
non-substantive amendments to trade regulation rules are exempt from
the rulemaking procedures of Section 18 of the FTC Act).
\11\ 5 U.S.C. 553(b)(B) (providing that ``good cause'' exists to
forego notice and comment when public comment is unnecessary).
\12\ 5 U.S.C. 603 and 604 (no regulatory flexibility analyses
required where the APA does not require public comment).
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Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
List of Subjects in 16 CFR Part 436
Advertising, Business and industry, Franchising, Trade practices.
For the reasons set out in the preamble, the Federal Trade
Commission amends 16 CFR part 436 as follows:
PART 436--DISCLOSURE REQUIREMENTS AND PROHIBITIONS CONCERNING
FRANCHISING
0
1. The authority citation for part 436 continues to read as follows:
Authority: 15 U.S.C. 41-58.
Sec. 436.8 [Amended]
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2. Amend Sec. 436.8 as follows:
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a. In paragraph (a)(1), remove ``$570'' and, in its place, add
``$615'';
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b. In paragraph (a)(5)(i), remove both references to ``$1,143,000''
and, in their place, add ``$1,233,000''; and
0
c. In paragraph (a)(5)(ii), remove ``$5,715,500'' and, in its place,
add ``$6,165,000''.
By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-12617 Filed 6-26-20; 8:45 am]
BILLING CODE 6750-01-P
