Disclosure Requirements and Prohibitions Concerning Franchising, 38790-38791 [2020-12617]

Agencies

• FEDERAL TRADE COMMISSION

[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]

0
2. Amend Sec.  436.8 as follows:
0
a. In paragraph (a)(1), remove ``$570'' and, in its place, add 
``$615'';
0
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