FTC rules and certain state statutes require that certain disclosures be made by franchisors to prospective franchisees before entering into new agreements or modifying existing agreements. These disclosures must be contained in a prescribed disclosure document form called the Franchise Disclosure Document, or FDD, in which a franchisor must disclose detailed information about its principals and business.
Penalties for Noncompliance
Franchisors and their individual principals face significant penalties for failure to comply with federal and state franchise laws. These penalties are serious and can be imposed even if the noncompliance was not intentional.
The FTC may recover substantial civil penalties for each violation of the FTC rules plus rescission or reformation of contracts, a refund of money and payment of damages to certain individuals.
Because the penalties for noncompliance are so serious, it is critical to work with an experienced attorney — even before you think that you might be in trouble. The lawyers at Einbinder & Dunn, LLP, help clients prevent legal trouble before it begins. We do so by guiding our clients through the legal system, offering them in-depth counsel on matters of franchise law.
What We Do for Franchisors Who Find Themselves in Noncompliance
Franchisors who find themselves in noncompliance with FTC rules and state regulations can turn to Einbinder & Dunn, LLP, for effective representation. We focus on negotiating settlements with state authorities and correcting and registering our clients' FDDs. Our goal is to protect our clients from potentially harsh consequences.
We also offer legal counsel to assist franchisors with compliance in the future. We can assist in the preparation and registration (where required) of FDDs, helping our clients to comply with the law and avoid potential litigation.
For questions or additional information about franchise law compliance, please contact Einbinder & Dunn by filling out our contact form. You can also call 866-490-4909 or 212-391-9500 to speak with our attorneys and experienced support staff.
Julie Lusthaus was interviewed on WVOX 1460 AM by Marsha Gordon, President and CEO of The Business Council of Westchester about issues in franchising.
