Rule2024-15338
Disclosure Requirements and Prohibitions Concerning Franchising
Primary source
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Published
July 12, 2024
Effective
July 12, 2024
Issuing agencies
Federal Trade Commission
Abstract
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.
Full Text
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<title>Federal Register, Volume 89 Issue 134 (Friday, July 12, 2024)</title>
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[Federal Register Volume 89, Number 134 (Friday, July 12, 2024)]
[Rules and Regulations]
[Pages 57077-57078]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-15338]
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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 July 12, 2024.
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: 202-326-3711, email: <a href="/cdn-cgi/l/email-protection#67041308030615082701130449000811"><span class="__cf_email__" data-cfemail="94f7e0fbf0f5e6fbd4f2e0f7baf3fbe2">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The FTC's Trade Regulation Rule entitled
``Disclosure Requirements and
[[Page 57078]]
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,
2016, and 2020.\7\ The Commission bases the exemption monetary
thresholds that will take effect on July 12, 2024, on the increase in
the CPI-U between 2007 and 2023. During this period, the annual average
value of the Consumer Price Index for all urban consumers and all items
increased by 46.96%--from an index value of 207.342 to a value of
304.702.\8\ Applying the percentage increase to the three monetary
thresholds increases the thresholds as follows:
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\7\ 77 FR 36149 (June 18, 2012); 81 FR 31500 (May 19, 2016); 85
FR 38790 (June 29, 2020).
\8\ Bureau of Labor Statistics, Consumer Price Index: Historical
Consumer Price Index for All Urban Consumers (CPI-U), available at
<a href="https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-202402.pdf">https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-202402.pdf</a>.
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Adjusted 2024
Exemption 2007 Base threshold
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Minimum Payment............................................................... $500 \9\ $735
Large Franchise Investment.................................................... 1,000,000 1,469,600
Large Franchisee.............................................................. 5,000,000 7,348,000
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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 12, 2024. 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).
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\9\ As in prior adjustments, the Commission has exercised its
inherent discretionary authority to round the total for the minimum
payment exemption 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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List of Subjects for 16 CFR Part 436
Advertising, Business and industry, Franchising, Trade practices.
For the reasons set forth in the preamble, the Federal Trade
Commission amends 16 CFR part 436 as follows:
PART 436--DISCLOSURE REQUIREMENTS AND PROHIBITIONS CONCERNING
FRANCHISING
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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 ``$615'' and, in its place, add
``$735'';
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b. In paragraph (a)(5)(i), remove both references to ``$1,233,000''
and, in their place, add ``$1,469,600''; and
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c. In paragraph (a)(5)(ii), remove ``$6,165,000'' and, in its place,
add ``$7,348,000.''
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2024-15338 Filed 7-11-24; 8:45 am]
BILLING CODE 6750-01-P
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