What is the scope of the “parent” disclosures, as set forth in Items 1, 3, 4, and 21 of the amended Rule?
The scope of the “parent” disclosures in the amended Rule varies depending upon the specific disclosure items. Below, FTC staff addresses specific questions that have been raised regarding the parent disclosures found in Items 1, 3, 4, and 21 of the amended Rule. As an initial matter, the original Franchise Rule, unlike the Uniform Franchise Offering Circular (“UFOC”) Guidelines, always has required the disclosure of parent information, even though the states do not require the disclosure of such information. Accordingly, in large measure, the amended Franchise Rule retains these provisions from the original Rule, with some modifications, as discussed below. Before addressing the specific parent disclosures set forth in the amended Rule, FTC staff notes the definition of “parent” set out at section 436.1(m): “an entity that controls another entity directly, or indirectly through one or more subsidiaries.” The definition focuses on “control,” not mere ownership. Accordingly, a parent th
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