IFA Releases New Franchise Guidelines

IFA Releases New Franchise Guidelines

Isabella Delgado
2 min read

IFA Releases New Guidelines to Strengthen Franchising Through Transparency

The International Franchise Association (IFA) has introduced new recommendations to enhance the transparency of franchising, aiming to modernize current disclosure requirements and improve the integrity of the franchise model. The guidelines advocate for a conversational style of disclosure, the incorporation of an executive summary in franchise opportunities, and thorough pre-investment due diligence for franchisees. Additionally, third-party sellers are urged to disclose their professional experience, litigation history, and the services they provide on behalf of franchises. These measures are designed to protect the financial well-being of all parties involved in the franchising process.

Key Takeaways

  • IFA's recommendations aim to enhance franchising transparency and integrity.
  • Proposed changes include a conversational style of disclosure and multimedia incorporation in the Franchise Disclosure Document (FDD).
  • Franchisees are advised to conduct comprehensive pre-investment research, including FDD analysis and attorney consultation.
  • Third-party sellers are required to disclose specific professional information to promote transparency and minimize conflicts of interest.


The IFA's efforts to promote transparency in franchising seek to safeguard the financial interests of all involved parties. This initiative may prompt regulatory updates from organizations such as the Federal Trade Commission, and could have global implications, particularly in countries with substantial franchising sectors.

The move towards increased transparency is driven by concerns over potential exploitation of franchisees and related litigation risks. It is expected to lead to better-informed investors and a reduction in disputes. Short-term effects may include legal challenges and adjustments in the disclosure process, while in the long term, the new guidelines could foster a more stable and credible franchising ecosystem, attracting greater investment and diminishing regulatory scrutiny. This development may also serve as a precedent for transparency standards in other industries.

Did You Know?

  • Conversational Style of Disclosure & Multimedia Use in Franchise Disclosure Document (FDD): The IFA promotes a more accessible and engaging approach in FDDs by moving away from traditional legal language and incorporating multimedia elements, thereby facilitating informed decision-making for prospective franchisees.
  • Thorough Pre-investment Due Diligence for Franchisees: The IFA emphasizes the significance of comprehensive pre-investment research for potential franchisees, enabling them to make informed decisions and ensuring the long-term sustainability of their investments and franchise relationships.
  • Third-Party Sellers' Disclosure Requirements: The IFA's guidelines mandate that third-party sellers fully disclose their professional background, litigation history, and the services they perform for franchises, with the aim of promoting transparency and maintaining the integrity of the franchise model.

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