A rule requiring that a franchisor provide a disclosure statement to all prospective franchisees was adopted by the: ______.
A) UCC.
B) Franchise Tax Board.
C) Securities and Exchange Commission.
D) Federal Trade Commission.

Question

Quizplus · Accepted Answer

The rule requiring franchisors to provide a disclosure statement to potential franchisees is enforced by the Federal Trade Commission (FTC). The FTC's Franchise Rule mandates that franchisors provide a disclosure document to all prospective franchisees at least 14 days before signing a contract or making any payment. This rule was put in place to protect franchisees from fraudulent or misleading information and to ensure transparency in the franchising process. The UCC governs the sale of goods, the Franchise Tax Board is responsible for collecting state franchise taxes, and the Securities and Exchange Commission regulates the financial securities industry. None of these entities are directly involved in regulating franchise disclosure requirements.

A Rule Requiring That a Franchisor Provide a Disclosure Statement