96-9275. Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures

[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Notices]
[Pages 16503-16504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9275]



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FEDERAL TRADE COMMISSION


Disclosure Requirements and Prohibitions Concerning Franchising 
and Business Opportunity Ventures

agency: Federal Trade Commission.

action: Invitation to Comment on Requested Exemption from Trade 
Regulation Rule.

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summary: The Commission is requesting public comment with respect to a 
request from Freightliner Corporation for an exemption from the 
requirements of the Franchise Rule.

dates: Written comments will be accepted until June 14, 1996.

addresses: Comments may be filed in person or mailed to: Secretary, 
Federal Trade Commission, 6th Street and Pennsylvania Avenue, N.W., 
Washington, D.C. 20580. Requests for copies of the petition and the 
Franchise Rule should be directed to the Public Reference Branch, Room 
130, [phone].

for further information contact: Myra Howard, Attorney, PC-H-238, 
Federal Trade Commission, 6th Street and Pennsylvania Avenue, NW., 
Washington, DC 20580, [phone].

supplementary information: On December 21, 1978, the Federal Trade 
Commission promulgated a trade regulation rule entitled ``Disclosure 
Requirements and Prohibitions Concerning Franchising and Business 
Opportunity Ventures'' (16 CFR Part 436) (``the Rule''). In general, 
the Rule provides for pre-sale disclosure to prospective franchisees of 
important information about the franchisor, the franchise business and 
the terms of the proposed franchise relationship. A summary of the Rule 
is available upon request from the FTC Public Reference Branch, Room 
130, FTC Headquarters Building, 6th Street and Pennsylvania Avenue, 
NW., Washington, DC 20580.
    Section 18(g) of the Federal Trade Commission Act provides that any 
person or class of persons covered by a trade regulation rule may 
petition the Commission for an exemption from such rule, and if the 
Commission finds that the application of such rule to any person or 
class of persons is not necessary to prevent the unfair or deceptive 
act or practice to which the rule relates, the Commission may exempt 
such person or class from all or any part of the rule.
    Freightliner Corporation filed a petition for exemption pursuant to 
Section 18(g) on November 18, 1994. Briefly stated, Petitioner alleges 
that an exemption should be granted to

[[Page 16504]]

Freightliner because: (1) Freightliner dealers are sophisticated 
business persons; (2) prospective dealers and their advisors have more 
than adequate time to review the dealer agreement and other information 
before executing a dealer contract; (3) given their levels of 
experience and sophistication, prospective dealers will be well-
acquainted with the truck industry and all relevant facts about the 
dealership; and (4) automobile dealer associations have supported, or 
not opposed, previous exemption petitions.
    In August 1979, the staff of the Commission issued an ``informal 
staff advisory opinion'' under Section 1.1(b) of its Rules of Practice, 
16 C.F.R. Sec. 1.1(b), stating the staff's conclusion that ``in 
accordance with the facts represented by Freightliner in its request 
for an advisory opinion,'' ``dealerships sold by Freightliner * * * 
would be exempt from the rule for lack of the required payment mandated 
by Section 436.2(a)(2) of the Franchise Rule, 16 CFR 
Sec. 436.2(a)(2).''\1\ A staff advisory opinion is not binding on the 
Commission, but a decision to grant the Petitioner's current request 
effectively would continue to excuse Freightliner from compliance with 
the Franchise Rule, albeit by exemption rather than by a determination 
that the Rule by its terms does not apply.
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    \1\ Bus. Fran. Guide (CCH) para. 6389 at 9561 (Aug. 27, 1979). 
See also 16 CFR Sec. 436.2(a)(3)(iii), exempting from consideration 
as ``required payments'' payments under Sec. 436.2(a)(2) within the 
first fix months after the commencement of operation of the 
franchisee's business totalling less than $500.00.
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    Freightliner now requests an exemption from the Rule. It argues 
that recent changes in its business practices, in particular, its 
current requirement that dealers purchase for operation of their 
businesses certain computerized software priced over $500.00, have 
brought the company within the scope of the Rule. See Letter to Donald 
S. Clark, Secretary of the Commission, dated January 18, 1996, from 
William L. Monts III, counsel to Petitioner. A complete presentation of 
the arguments submitted by Petitioner appears in the petition as 
supplemented by the letter to Mr. Clark from Mr. Monts. Both the 
petition and the supplemental letter may be obtained from the FTC 
Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, 
NW., Washington, DC 20580, during regular business hours.
    In assessing the present exemption request, the Commission solicits 
comments on all issues germane to the proceeding, including the 
following: (1) Is there any evidence indicating that Petitioner may 
engage in unfair or deceptive acts or practices in the offer and sale 
of truck franchises? (2) If not, is it in the public interest to exempt 
it from coverage under the Franchise Rule?
    Interested parties may submit written data, views or arguments on 
any issues of fact, law or policy that may bear on the requested 
exemption, whether or not these issues have been raised by the petition 
or this notice. Comments may be submitted within sixty days of the date 
of this notice and should be addressed to the Secretary of the 
Commission, 6th Street and Pennsylvania Avenue, NW., Washington, DC 
20580. Comments should be marked ``Freightliner Franchise Rule 
Exemption Comment,'' and two copies should be submitted.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-9275 Filed 4-12-96; 8:45 am]
BILLING CODE 6750-01-M