81 FR 31500 - Disclosure Requirements and Prohibitions Concerning Franchising

FEDERAL TRADE COMMISSION

Federal Register Volume 81, Issue 97 (May 19, 2016)

The FTC announces revised monetary thresholds for three exemptions from the Franchise Rule. The FTC is required to adjust the size of the monetary thresholds every fourth year based upon the Consumer Price Index for all urban consumers published by the Department of Labor.

[Federal Register Volume 81, Number 97 (Thursday, May 19, 2016)]
[Rules and Regulations]
[Pages 31500-31501]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-11789]


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FEDERAL TRADE COMMISSION

16 CFR Part 436


Disclosure Requirements and Prohibitions Concerning Franchising

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Final rule amendments.

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SUMMARY: The FTC announces revised monetary thresholds for three 
exemptions from the Franchise Rule. The FTC is required to adjust the 
size of the monetary thresholds every fourth year based upon the 
Consumer Price Index for all urban consumers published by the 
Department of Labor.

DATES: This final rule is effective on July 1, 2016.

FOR FURTHER INFORMATION CONTACT: Craig Tregillus, Franchise Rule 
Coordinator, Division of Marketing Practices, FTC, 600 Pennsylvania 
Avenue NW., Washington, DC 20580, (202) 326-2970, [email protected].

SUPPLEMENTARY INFORMATION: The FTC's Trade Regulation Rule entitled 
``Disclosure Requirements and Prohibitions Concerning Franchising'' 
(Franchise Rule or Rule) \1\ provides three exemptions based on a 
monetary threshold: The ``minimum payment exemption,'' \2\ the ``large 
franchise investment exemption'' \3\ and the ``large franchisee 
exemption.'' \4\ The Rule requires the Commission to ``adjust the size 
of the monetary thresholds every fourth year based upon the . . . 
Consumer Price Index for all urban consumers [CPI-U] published by the 
Department of Labor.'' \5\ This requirement, added by the 2007 
amendments to the Rule, took effect on July 1, 2007, so that 
franchisors would have a one-year phase-in period within which to 
comply with the amended Rule's revised disclosure requirements before 
the July 1, 2008, final compliance deadline.\6\
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    \1\ 16 CFR part 436.
    \2\ 16 CFR 436.8(a)(1).
    \3\ 16 CFR 436.8(a)(5)(i).
    \4\ 16 CFR 436.8(a)(5)(ii).
    \5\ 16 CFR 436.8(b).
    \6\ 72 FR 15444 (Mar. 30, 2007).
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    As required by the Rule, the Commission revised the three monetary 
thresholds to reflect inflation in the CPI-U from 2007 through 2011 of 
8.49 percent.\7\ The adjusted thresholds, which took effect on July 1, 
2012, raised the minimum payment exemption from $500 to $540; the large 
franchise investment exemption from $1 million to $1,084,900; and the 
large franchisee exemption from $5 million to $5,424,500.\8\
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    \7\ 77 FR 36149, 36150 (June 18, 2012).
    \8\ Id.
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    We base the exemption monetary thresholds that will take effect on 
July 1, 2016, on the increase in the CPI-U between 2007 and 2015. 
During this period, the annual average value of the Consumer Price 
Index for all urban consumers and all items increased by 14.31 
percent--from an index value of 207.342 to a value of 237.017.\9\ 
Applying the percentage increase to the three monetary thresholds 
increases the thresholds as follows:
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    \9\ Bureau of Labor Statistics, CPI Detailed Report: Data for 
February 2016, Table 24, p. 72, available at http://www.bls.gov/cpi/cpid1602.pdf.

[[Page 31501]]



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                                                          Adjusted  2016
                Exemption                    2007 base       threshold
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Minimum Payment.........................            $500       \10\ $570
Large Franchise Investment..............       1,000,000       1,143,100
Large franchisee........................       5,000,000       5,715,500
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    Because the calculation of these thresholds is purely ministerial 
in nature and implements the Rule's mandatory adjustment mechanism, 
these adjustments are exempt from the rulemaking procedures specified 
in section 18 of the FTC Act.\11\ In addition, the Commission has 
determined that notice and comment are unnecessary under the 
Administrative Procedure Act (APA) for the same reason. The Commission, 
therefore, has omitted notice and comment for good cause as provided by 
section 553(b)(B) of the APA.\12\ For this reason, the requirements of 
the Regulatory Flexibility Act also do not apply.\13\ Accordingly, the 
adjusted thresholds will take effect on July 1, 2016.
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    \10\ The Commission has rounded this figure from $571.55 to $570 
for compliance clarity and simplicity.
    \11\ See 15 U.S.C. 57a(d)(2)(B); 16 CFR 1.15(b) (providing that 
non-substantive amendments to trade regulation rules are exempt from 
the rulemaking procedures of Section 18 of the FTC Act).
    \12\ 5 U.S.C. 553(b)(B) (providing that ``good cause'' exists to 
forego notice and comment when public comment is unnecessary).
    \13\ 5 U.S.C. 603 and 604 (no regulatory flexibility analyses 
required where the APA does not require public comment).
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List of Subjects in 16 CFR Part 436

    Advertising, Business and industry, Franchising, Trade practices.

Rule Amendments

    For the reasons set out in the preamble of this document, the 
Federal Trade Commission amends 16 CFR part 436 as follows:

PART 436--DISCLOSURE REQUIREMENTS AND PROHIBITIONS CONCERNING 
FRANCHISING

0
1. The authority citation for part 436 continues to read as follows:

    Authority: 15 U.S.C. 41-58.


Sec.  436.8  [Amended]

0
2. Amend Sec.  436.8 as follows:
0
a. In paragraph (a)(1), remove ``$540'' and, in its place, add 
``$570'';
0
b. In paragraph (a)(5)(i), remove both references to ``$1,084,900'' 
and, in their place, add ``$1,143,100''; and
0
c. In paragraph (a)(5)(ii), remove ``$5,424,500'' and, in its place, 
add ``$5,715,500''.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-11789 Filed 5-18-16; 8:45 am]
BILLING CODE 6750-01-P