IFA Applauds NASAA Model Franchise Seller Legislation

The International Franchise Association (IFA) submitted comments to the North American Securities Administrators Association (NASAA) in support of its proposed Franchise Broker Act, a model for state legislatures which would provide registration and disclosure requirements for third-party franchise sellers and their representatives. In the comments, IFA applauds NASAA's efforts to establish greater transparency in the franchise sales process, while suggesting amendments to the proposal to provide clarity and practical application of registration and disclosure requirements.

"Consistent with IFA's Responsible Franchising principles, we applaud NASAA's commitment to improving transparency in the franchise sales process," said Michael Layman, IFA senior vice president of government relations and public affairs. "These additional disclosure requirements are a critical step in protecting the franchise model for the long term by providing prospective franchisees with information about the various parties involved in a franchise sale before making a purchasing decision."

The proposal includes registration and disclosure requirements for franchise sellers, including brokers, franchise sales organizations, and others engaged in the offer or sale of a franchise, which would improve transparency in franchise sales and ultimately lead to stronger franchise relationships—the key building block of the franchise business model.

As part of IFA's longstanding efforts to promote Responsible Franchising, IFA supports legislation in California, S.B. 919, to extend disclosure requirements to third-party franchise sellers. The legislation overwhelmingly passed the state Senate last month. IFA's comments include suggested changes to the proposal to more closely align with S.B. 919.

Further, IFA released a series of policy recommendations for franchisors, franchisees, and suppliers to improve the pre-sale process and strengthen the franchise model. Those recommendations, announced in May, can be viewed here.

IFA was joined by nearly 100 individuals in the franchise community in supporting NASAA's proposal. IFA's full comments are available here.