Why did the states and federal government restrict franchising?
A. In the sixties, there had been a rash of over zealous sales of franchise with a lot of unreal promises and “guaranties,” very similar to what had happened in the securities area years before. As a result, California and other states passed franchise disclosure laws patterned after the state securities laws, which basically required full disclosure of all the necessary facts so that a prospective buyer could make a fully informed choice. Violators are faced with both criminal penalties and civil damages.
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