FTC publishes new monetary thresholds for three exemptions to the Franchise Rule

On July 12, 2024, the Federal Trade Commission (FTC) announced 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 changes in the Consumer Price Index for All Urban Consumers published by the Department of Labor. The three monetary exemption thresholds are used to determine whether the sale of a franchise qualifies for an exemption under the FTC’s Franchise Rule (16 CFR Parts 436 and 437). The Franchise Rule requires franchisors to disclose key information to prospective buyers to evaluate the risks and benefits of investing in a franchise.

The three exemptions from compliance with the Franchise Rule, which have taken effect as of July 12, 2024, are:

• Sales where the buyer pays less than $735 (currently $615) for the franchise;
• Sales requiring a large investment where the franchisee pays at least $1,469,600 (currently $1,233,000), excluding the cost of unimproved land and any franchisor (or affiliate) financing; and
• Sales to large entities, such as multi-unit franchisees, airports, hospitals, and universities that have been in business for at least five years and have a net worth of at least $7,348,000 (currently $6,165,000).