Franchise Advertising Rules

The rule imposes six different requirements in connection with the advertising offering licensing contracting sale or other promotion of a franchise in or affecting commerce.

Franchise advertising rules. Building a strong brand requires that the franchisor and all franchisees send a consistent message to prospective and current customers. In other words a sandwich shop franchisor would not required to file advertisements for. This comes out to about 3 2 percent of all businesses and 35 percent of all retail and service revenue in the united states. Unfortunately some agreements impose more requirements on franchisees than on franchisors.

In the u s the federal trade commission in ftc rule 436 defines a franchise as a business relationship that has three definitional elements. The franchise rule gives prospective purchasers of franchises the material information they need in order to weigh the risks and benefits of such an investment. The term advertisement is broadly defined under most state franchise laws to include any prospectus circular notice advertisement or letter of communication in writing audio or video that offers a franchise for sale or confirms the sale of a franchise. The first is to build a strong brand and the second is to recruit customers.

Advertising includes newspaper television or radio advertisements as well as. According to the article what is franchising by robert gappa on the franchise update web site there are over 2 500 franchise systems in the united states with over 600 000 units. Franchise system advertising efforts have two objectives. The franchise agreement will set forth the duration of the contract.

In some franchises the franchisee is required to spend a certain percentage for local advertising but the franchisor is remarkably free of hard and fast obligations. Under these laws any advertising or promotional materials relating to the sale of franchises must be filed in advance but this requirement does not extend to advertising that focuses on the product or service being offered by the franchise system itself.