While it may not discourage all such activities, it will act as deterrent. It also reduces the amount that an entrepreneur may lose by entering into a business arrangement with an unsavory character. If so, a state official can use the rule to pursue state action. If interstate, then, it is probably beneficial to have Federal action. The FTC has requested comments on whether the Franchise Rule should exempt trade show promoters from coverage as brokers.
Advocacy adamantly opposes such an exemption.
Trade shows are often the first contact that a potential franchisee may have with a franchise. Representations made at the trade show or in the advertisements for the trade show could be a determining factor in the decision to invest in a particular franchise. If the representations are false, the franchisee should have some form of recourse. In the advanced notice of proposed rulemaking, the FTC expressed concerns about the fact that franchisors represent that the Franchise Rule prohibits them from making earnings disclosure. The Office of Advocacy is also concerned about such misrepresentations and supports the FTC' s attempt to clarify the rule.