Bill Overview
Title: To provide a private right of action for persons harmed by violations of the Franchise Rule of the Federal Trade Commission, and for other purposes.
Description: This bill creates a private right of action for individuals harmed by violations of the Federal Trade Commission's Franchise Rule. The rule requires franchisors to disclose certain relevant information to prospective franchisees.
Sponsors: Rep. Schakowsky, Janice D. [D-IL-9]
Target Audience
Population: Prospective and current franchisees impacted by violations of the Franchise Rule
Estimated Size: 1500000
- The bill provides a private right of action for persons harmed by violations of the Franchise Rule, so the primary individuals impacted are prospective and current franchisees.
- The Franchise Rule affects franchisors and franchisees in the business sector globally, but primarily in the US where the FTC regulates these activities.
- Any individuals globally considering acquiring or currently owning franchises could potentially benefit from the enforcement of this rule, as it ensures transparency from franchisors.
- The bill directly impacts those harmed by Franchise Rule violations, likely increasing the accountability of franchisors worldwide.
Reasoning
- The primary beneficiaries of this policy are current and prospective franchisees who might experience issues due to franchisors not disclosing critical information as mandated by the Franchise Rule.
- By creating a private right of action, this policy allows affected individuals to seek recourse and compensation more easily.
- Given the policy's scope, the main impact will be on individuals who have recently bought or are considering buying a franchise in the United States where the FTC can actively enforce the rule.
- The estimated budget restricts the number of potential claims that can be supported annually, which affects how many individuals might successfully act upon a violation.
- The effects on wellbeing should be varied, with individuals directly affected by violations experiencing the greatest improvement due to increased legal recourse.
Simulated Interviews
Franchise Owner (Dallas, Texas)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy is great because it will make companies more responsible for what they tell us about the business upfront.
- I feel more secure knowing that there's a legal path to follow if I get hurt due to lack of information.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 5 | 4 |
Restaurateur (Chicago, Illinois)
Age: 52 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- The policy seems helpful for newcomers, but I have no immediate need for it.
- Although it might drive franchisors to be more transparent, as a seasoned owner, I've already navigated these issues.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 5 | 3 |
Aspiring Franchisee (Sacramento, California)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This policy directly affects my current search for franchises.
- It's reassuring to know there's a mechanism in place to hold franchisors accountable, should anything go wrong.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Franchisor (Miami, Florida)
Age: 43 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- This policy introduces more accountability for us, which isn't a bad thing.
- We already practice transparency, but it will make the industry more robust overall.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 6 |
Retired Corporate Executive (New York, New York)
Age: 60 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- This policy is excellent because it strengthens the resources available to franchisees.
- However, I myself will not be directly impacted as my involvement is mostly advisory.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 8 | 8 |
Marketing Specialist (Atlanta, Georgia)
Age: 28 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- The ability to pursue legal action is an empowering change.
- If I face issues, knowing that there's a recourse makes me more comfortable stepping into franchising.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Independent Franchise Consultant (Seattle, Washington)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This new policy means I can guide prospective franchisees more confidently.
- An effective legal backup strengthens their negotiating position with franchisors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Franchise Area Developer (Nashville, Tennessee)
Age: 38 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 14/20
Statement of Opinion:
- The policy encourages us to be even more diligent.
- It might slightly change the way we operate, especially with our disclosures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Legal Advisor for Small Businesses (Denver, Colorado)
Age: 46 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- This policy provides clear legal avenues for franchisees, making my role more defined and structured.
- It could lead to an increase in cases seeking my services.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Entrepreneur (Austin, Texas)
Age: 25 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- It boosts my confidence knowing there's legal support against misinformation.
- The policy should essentially make franchising a more transparent venture.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $7000000)
Year 2: $5000000 (Low: $3000000, High: $7000000)
Year 3: $5000000 (Low: $3000000, High: $7000000)
Year 5: $5000000 (Low: $3000000, High: $7000000)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Increased accountability for franchisors may lead to better market conditions and healthier franchise relationships.
- Potential increase in litigation costs and court congestion.
- The broader impacts on consumer confidence and economic activity are hard to quantify but are potentially positive.