Feedback about Noncompete Clauses, a Separate Issue, Due to FTC by April 19
The International Franchise Association, plus six other major business organizations, had urged the Federal Trade Commission to extend the deadline for public comments on the agency’s proposed rules changes affecting franchise agreements and franchisor business practices. The FTC has added 30 days to the comment period, until with a revised deadline of June 8.
In a March 27 letter from the IFA to April Tabor, who is the acting director for records and information management at the FTC, the IFA and other organizations had requested a 60-day extension for public comments. Additional signatories to the letter were the American Hotel & Lodging Association, National Restaurant Association, U.S. Chamber of Commerce, National Retail Federation, National Association of Convenience Stores and International Sign Association.
Reasons Cited for Extending Deadline
In seeking the extension for comments, the IFA’s letter had based the request on the complexity and scope of the rules changes, which involve legal ramifications, as well as the timing. The letter said the modifications cover “franchisor business practices and provisions contained in franchise agreement” and their impact on consumers, workers and competition generally. The letter further said “the timing of the deadline to submit comments further complicates responses. Most franchise companies are engaged in the time-consuming annual renewal of their franchise disclosure documents in accordance with the Franchise Rule.”
In announcing the comments extension on its website, the FTC said “the agency would like to know more about how franchisors may exert control over franchisees and their workers. In particular, the agency is interested in how franchisors disclose certain aspects and contractual terms of the franchise relationship, as well as the scope, application and effect of those aspects and contractual terms.” The FTC’s stated mission is to promote competition and protect and educate consumers.
Deadline on Noncompete Rules Changes
The FTC website announcement further stated: “Separately, the FTC is seeking public comment on a proposed rule to ban noncompete clauses for workers in some situations. As part of that proposed rulemaking, the FTC is interested in public comments on the question of whether that proposed rule should also apply to noncompete clauses between franchisors and franchisees.” The deadline for comments about noncompete clauses, which have been applied to franchise workers, is April 19, 2023. You can submit a comment about franchise agreements and franchisor business agreements and franchise rules here. You can submit comments about noncompete clauses here.