[Federal Register Volume 77, Number 117 (Monday, June 18, 2012)]
[Rules and Regulations]
[Pages 36149-36150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14785]



16 CFR Part 436

Disclosure Requirements and Prohibitions Concerning Franchising

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Final rule amendments.


SUMMARY: The FTC announces revised monetary thresholds for three 
exemptions from the Franchise Rule. 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 

DATES: This final rule is effective July 1, 2012.

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 $500 ``minimum payment exemption,'' \2\ the $1 
million ``large franchise investment exemption'' \3\ and the $5 million 
``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 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

[[Page 36150]]

before the July 1, 2008, final compliance deadline.\6\

    \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).

    Between 2007 and 2011, the annual average value of the Consumer 
Price Index for all urban consumers and all items increased by 8.49 
percent--from an index value of 207.342 to a value of 224.939.\7\ 
Applying the percentage increase to the three monetary thresholds 
increases the thresholds as follows:

    \7\ Consumer Price Index, All Urban Consumers (``CPI-U''), 
available at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
    \8\ The Commission has rounded this figure from $542.45 to $540 
for compliance clarity and simplicity.

                                                   Original    Adjusted
                    Exemption                      threshold   threshold
Minimum Payment.................................        $500    \8\ $540
Large Franchise Investment......................   1,000,000   1,084,900
Large franchisee................................   5,000,000   5,424,500

    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.\9\ 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.\10\ For this reason, the requirements of 
the Regulatory Flexibility Act also do not apply.\11\ Accordingly, the 
adjusted thresholds will take effect on July 1, 2012.

    \9\  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).
    \10\ 5 U.S.C. 553(b)(B) (providing that ``good cause'' exists to 
forego notice and comment when public comment is unnecessary).
    \11\ 5 U.S.C. 603 and 604 (no regulatory flexibility analyses 
required where the APA does not require public comment).

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:


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

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

2. Amend ' 436.8 as follows:
a. In paragraph (a)(1), remove ``$500'' and, in its place, add 
b. In paragraph (a)(5)(i), remove all references to ``$1 million'' and, 
in their place, add ``$1,084,900''; and
c. In paragraph (a)(5)(ii), remove ``$5 million'' and, in its place, 
add ``$5,424,500''.

    By direction of the Commission.
Donald S. Clark,
[FR Doc. 2012-14785 Filed 6-15-12; 8:45 am]