What is the FTC Franchise Rule?
The FTC Franchise Rule (16 CFR Part 436) is the federal regulation governing franchise sales in the United States. It defines a franchise by three elements — a shared trademark, significant control or assistance, and a required payment — and requires franchisors to deliver a 23-item Franchise Disclosure Document at least 14 days before a prospect signs or pays. It mandates disclosure, not registration; a group of states adds registration on top.
Two consequences worth knowing. First, the three-element definition catches "licenses" and "dealerships" that walk like franchises — the accidental franchise problem for sellers. Second, there is no federal review of FDD contents: the Rule requires the document to exist and be delivered, while verification is left to you and, in registration states, to state examiners.