What FTC 16 CFR Part 436 - Franchise Rule (Disclosure Requirements and Prohibitions Concerning Franchising) requires
16 CFR Part 436, the Federal Trade Commission's Franchise Rule, governs the disclosure and prohibited-practice requirements for franchise sales in the United States and is enforced under section 5 of the FTC Act (15 USC 45) and section 19 (15 USC 57b). The rule (current iteration adopted by 72 FR 15544, 30 March 2007, effective 1 July 2008, replacing the original 1979 rule) applies to any franchise sale in or affecting interstate commerce where the franchise satisfies the three-element definition in section 436.1(h): (1) a franchisee will obtain the right to operate a business that is identified or associated with the franchisor's trademark or to offer, sell, or distribute goods or services that are identified or associated with the franchisor's trademark; (2) the franchisor will exert or has authority to exert a significant degree of control over the franchisee's method of operation, or provide significant assistance in the franchisee's method of operation; (3) as a condition of obtaining or commencing operation of the franchise, the franchisee makes a required payment or commits to make a required payment to the franchisor or its affiliate, the total of which (whether in lump-sum or instalments) reaches at least USD 615 within six months of operations (the inflation-adjusted minimum). Section 436.2 requires franchisors to furnish a Franchise Disclosure Document (FDD) at least 14 calendar days before the prospective franchisee signs a binding agreement or makes any payment (the 14-day cooling-off period). Section 436.5 sets out the 23 mandatory FDD disclosure items including the franchisor and parents/predecessors/affiliates, business experience, litigation, bankruptcy, initial fees, other fees, estimated initial investment, restrictions on goods/services, financing, franchisor's assistance, territory, trademarks, patents/copyrights/proprietary info, obligation to participate in operation, restrictions, renewal/termination/transfer, public figures, financial performance representations, outlet activity, franchisee list, financial statements, contracts, receipts. Section 436.8 sets exemptions (large investment USD 1,394,200+ adjusted annually, sophisticated investor, fractional franchise under 20% of revenue, leased department, oil dealer, insider). Section 436.9 prohibits franchisor misrepresentations including financial performance claims without reasonable basis, disclaiming representations contradicting the FDD, and requiring waivers of franchisee rights under state franchise law. Penalties: FTC Act section 5 injunction, section 19 consumer redress, civil penalty up to USD 51,744 per violation under 16 CFR 1.98 (2025 adjustment).
Pillar: Sales, Marketing & PR · Authority: United States Federal Trade Commission (ecfr.gov); Bureau of Consumer Protection - Division of Marketing Practices; coordination with North American Securities Administrators Association (NASAA) for state franchise registration overlays · Version: 1.0.0 · Last updated:
Primary source: https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436
SHA-256 integrity: 1bbf0c0866014e2d1103441f80f05f6013a598315b20c370f3152319b1669ce5
Primary Citations — 8 traced to source
- 16 CFR Part 436 FTC Franchise Rule https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436
- 16 CFR 436.1 definitions https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-436/section-436.1
+ 6 more citations (full bibliography, deterministic workflow, actionable schema and crosswalks) included in the vault unlock — $0.01 via Skyfire / L402 / Direct Base USDC.
Access
- Discovery (free): /api/v1/nodes/us-ftc-16-cfr-part-436-franchise-rule-disclosure-requirements.json — 6-field metadata
- Vault (full node): /api/v1/vault/nodes/us-ftc-16-cfr-part-436-franchise-rule-disclosure-requirements.json — full 13-key payload, $0.01 USDC (L402/Skyfire/Direct Base)
- Canonical URL: https://bidda.com/intelligence/us-ftc-16-cfr-part-436-franchise-rule-disclosure-requirements
- Back to registry: Browse all 10,090 compliance nodes