Rather than to reiterate the many comments that have already been noted at the Workshop, in our ABA article, and elsewhere, I would like to advance one additional reason why the FTC should clarify, one way or the other, whether the FTC Rule applies to international franchise transactions. With the exponential growth of international franchising over the past several years, it has become ever more critical that the FTC itself offer guidance on this issue. Without such guidance, U.S. franchisors must either take the conservative route and prepare deal-specific disclosure documents for each international transaction, at substantial expense, or elect not to do so, at its peril. There is now also the clear risk of a wave of new litigation in which parties will attempt to apply the decision reached in the Florida case to Little FTC Acts throughout the country. Stated succinctly, if the FTC does not clarify the issue, the courts will do so for it, undoubtedly with conflicting results.
Disclosures Be Modified .
In my judgment, this would impose an unwarranted impediment to the marketing of franchises. The FTC clearly considered that there is a significant difference between the kind of sales pressure that can be brought to bear in a face to face meeting, which cannot be replicated over a telephone, where the call can easily be disconnected, or by mail, where the recipient can simply discard the mailing. The telephone has not undergone a metamorphosis and if there has been an increase in misleading or fraudulent telephonic marketing practices, they can readily be dealt with without modifying the FTC Rule, under the FTC Act and FTC Rule anti-fraud provisions. The internet, while innovative, involves prospective franchisees taking affirmative action to investigate a franchisor via modem, a connection that is even more readily broken than a telephone call. Likewise, fraudulent internet marketing practices are equally easy to proscribe.