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Non-US Outlet and Franchise Disclosure

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FTC Franchise Rule.

Under the FTC franchise rule, you are not required to follow the basic franchise sales steps if the prospect will be granted a franchise for an outlet not located in the United States or any U.S. territory.

It does not matter whether the prospect resides in or outside of the United States or its territories. The rule simply does not apply if the outlet, including all protected market area associated with the outlet, will be outside of the United States and its territories.

Please note that if you are dealing with a prospect residing outside of the United States for an outlet to be located in the United States or any U.S. territory, or if you are dealing with an outlet located outside of the United States - such as in Canada or Mexico - but grant a protected territory that extends into the United States, you must follow the basic franchise sales steps.

NOTE: For any prospect or outlet in another country, you may be required to comply with that country's franchise laws, such as the Canadian provincial franchise laws and the Mexican franchise law.

State Laws.

But, some state laws may require you to follow the basic franchise sales steps even if the prospect will be granted a franchise for a non-U.S. outlet.

For example, the Maryland and New York laws may require you to follow the basic franchise sales steps if the prospect is a resident of the state, even if the outlet will be located outside of the United States.

If you think a state law might apply, check with the franchisor's lawyer or compliance manager about your disclosure obligations. 

If you would like to know if you can franchise your business, connect with me on LinkedIn and give me a call.

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About this Entry

This page contains a single entry by Warren Lewis published on May 5, 2013 7:28 PM.

When Should the Franchisor Be Allowed to Act in Bad Faith? was the previous entry in this blog.

Temporary Injunctions - Careful what you ask for. You might get it. is the next entry in this blog.

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