December 18, 2020

Cortez Masto, Murphy, Feinstein Call on FTC to Strengthen Protections for Franchise Owners

Washington, D.C. – U.S. Senators Catherine Cortez Masto (D-Nev.), Chris Murphy (D-Conn.) and Dianne Feinstein (D-Calif.), along with Representative Jan Schakowsky (D-Ill.-09), filed a comment with the Federal Trade Commission, calling on the FTC to strengthen its Franchise Rule and increase enforcement of the rule to protect prospective franchisees. They recommended a variety of amendments to the rule, including increased financial disclosure, a ban on unfair contract terms, and protections for franchisees with limited English proficiency.

“We write to urge the Federal Trade Commission (FTC) to retain and strengthen the Franchise Rule to protect investors who seek to buy a franchise business,” wrote the lawmakers. “Most franchise agreements are very one sided in favor of the franchisor leaving franchise owners facing loss of assets, failed businesses and bankruptcy. The FTC’s approach to only require voluntary disclosure of financial representation data and its lack of enforcement has failed to protect franchise owners.”

The full text of the letter can be found HERE.


Senator Cortez Masto has worked to protect small businesses and consumers alike from fraudulent or unfair practices. She introduced the SBA Franchise Loan Transparency Act to protect entrepreneurs from bad actors in the franchise industry who use deceptive financial information to sell underperforming or unprofitable businesses using government-guaranteed loans. She has also urged the FTC to do more to protect franchise owners from unfair business practices during the coronavirus pandemic including seeking comments on updates to the Franchise Rule.