The Federal Trade Commission (“FTC”) Franchise Rule has three exemptions from its disclosure requirements that include monetary threshold components, including the nominal payment exemption, the large investment exemption, and the large franchisee exemption. Every four years the FTC must adjust those monetary thresholds based on the Consumer Price Index. Accordingly, effective July 12, 2024, the FTC increased the monetary thresholds.

Effective July 12, 2024, to rely on the nominal payment exemption threshold, payments to the franchisor or its affiliates cannot exceed $735. To rely on the large investment exemption, the franchisee’s investment must exceed $1,469,600 (excluding the cost of land and franchisor financing). Finally, to rely on the large franchisee exemption, the franchisee must have a net worth of at least $7,348,000. To rely on any of these exemptions, a franchisor will need to ensure that all applicable exemption requirements are met, not just the monetary thresholds noted above. The full text of the FTC Rule, including the exemption requirements, is available here.