What is Franchise Rule?

Legal Definition
The Franchise Rule defines acts or practices that are unfair or deceptive in the franchise industry in the United States. The Franchise Rule is published by the Federal Trade Commission. The Franchise Rule seeks to facilitate informed decisions and to prevent deception in the sale of franchises by requiring franchisors to provide prospective franchisees with essential information prior to the sale. It does not, however, regulate the substance of the terms that control the relationship between franchisors and franchisees. Also, while The Franchise Rule removed the regulation of the sale of franchises from the purview of the states under the authority of the FTC to regulate interstate commerce, The FTC Franchise Rule does not require franchisors to disclose the unit performance statistics of the franchised system to new buyers of franchises as would be necessary and material under state and federal Securities and Exchange law.
-- Wikipedia