The Franchise Rule

The Franchise Rule is a federal regulation designed to protect potential franchisees. It requires franchisors to provide detailed information before a sale, including an extensive Franchise Disclosure Document (FDD) that outlines the business model, costs, obligations, and potential earnings. This transparency allows prospective franchise owners to make informed decisions and evaluate the risks and benefits of investing in a franchise. The rule promotes fair practices in the franchising industry and aims to prevent misleading claims by franchisors.