2024 Year in Review: Advancing Franchise Protections for the Largest Investor Class – Franchisees

By Published On: January 23rd, 2025
  • January: California Department of Financial Protection and Innovation clarifies that franchisors cannot charge franchisees fees that were not disclosed. (Link, Note: you must scroll down to the last question on this Question and Answer Page)
  • March: The FTC released a statement regarding the Choice Hotel’s decision to pull back from its planned acquisition of Wyndham. Of importance here is that the FTC considered the impact on franchisees from the merger, specifically stating that they will enforce the antitrust laws to ensure “that hotel franchisors compete on the merits for franchisees.” (Link)
  • March: The California Department of Financial Protection and Innovation (DFPI) issues a consent order against I Heart Mac & Cheese for disclosure violations. (Link)
  • April: Roark’s purchase of Subway finalizes meaning the FTC choose not to intervene. Under the Hart-Scott-Rodino Antitrust Improvements Act, the FTC was required to investigate this acquisition. Like the Choice/Wyndham merger, the FTC considered franchisee input, in this case, franchisees were in support of the acquisition.
  • July: The FTC makes major announcements on franchising based on the information they received from their Request for Information in 2023.
    • Policy Statement: “The Commission is issuing this Policy Statement to make clear its view that provisions included in franchise agreements or other contractual documents between franchisors and franchisees may not restrict franchisees’ communications with the Commission or any other state or federal law enforcer or regulator about potential law violations.” (Link)
    • Staff Guidance: Gave guidance on the unlawfulness of franchisors charging undisclosed fees. (Link)
    • Issue Spotlight: This identified risks to small business success in franchising, specifically looking at the 12 most identified issues. (Link)
    • Reopened the Request for Information to gather additional information on the issues.
    • Created a new Franchise Guidance page that contains resources and press release links to a wide variety of franchise information. This page is highlighted in a link on the FTC home page. (Link)
  • September: California Governor Newsom signs SB-919, a bill that requires franchise brokers to register with the state and provide additional disclosures to prospective franchisees. In this case, franchisee advocates from the AAFD and CFA worked with the IFA to get this legislation passed. (Link)
  • October: The FTC acted against Qargo Coffee for Franchise Rule violations, showing the FTC is serious about enforcing the Rule. (Link)
  • December: Rep. Jan Schakowsky introduces the Franchisee Freedom Act, H.R.10311, which would provide franchisees a private right of action on FTC Franchise Rule violations. It would give the ability to hold the franchisor liable for both actual damages and additional equitable relief.

Finally, it is worth highlighting the significant progress in franchisee engagement over recent years. Historically, the FTC received only a small number of comments from franchisees. Today, however, many franchisees actively participate in the FTC’s Open Meetings to voice their concerns, and thousands have submitted comments in response to the Request for Information. This growing level of engagement offers hope that this momentum will continue into 2025 and beyond.

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