Lusthaus Law frequently reports on updates from the Federal Trade Commission (FTC) and Financial Crime Enforcement Network (FinCEN). Their rules, regulations and policies impact the franchising industry and the rights and obligations of New York franchisors, franchisees, and multi-unit operators.
Our Q1 roundup highlighted the developments with the newly enacted state laws and FinCEN’s new guidance on the Corporate Transparency Act (CTA), and we received feedback from our clients and audience about how valuable this insight can be. Since the FTC and FinCEN recently issued new rules and announcements affecting franchising, now is another time to review how your NY franchise may be impacted and the action you can take to influence policy.
FTC Launches Public Inquiry into Anti-Competitive Regulations
In response to President Trump’s Executive Order on Reducing Anticompetitive Regulatory Barriers, the FTC announced efforts to identify and remove unnecessary regulations that exclude new market entrants and “predetermine economic winners and losers.” These actions, the FTC also said on April 14, will also level the playing field for newcomers and “dominant incumbents.”
“Regulations that reduce competition, entrepreneurship, and innovation can hamper the American economy,” said FTC Chairman Andrew N. Ferguson. “These need to be eliminated or modified to revitalize a competitive market.”
The FTC invites members of the public to comment on how federal regulations can harm competition and which are having an “anticompetitive effect.” The public can comment through May 27 via this Request for Information.
These are opportunities to address the risks and concerns you as a franchisor, franchisee, or multi-unit operator face, and enlist the help of the federal government. Speak with a franchise lawyer as well, to ensure the law provides solutions to your challenges.
FinCEN’s Beneficial Ownership Information Interim Rule – Make Your Voice Heard
The CTA applies to many U.S. companies, including franchises. It requires reporting companies to file beneficial ownership information (BOI) with FinCEN. The CTA aims to help the U.S. Department of the Treasury (DOT) combat financial anonymity that enables crimes such as corruption, drug trafficking, and terrorism.
FinCEN is a DOT bureau and announced on March 2 that it would not:
“…enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
Furthermore, the DOT said it would propose a rule that will “narrow the scope of the rule to foreign reporting companies only.” That interim rule was announced on March 21.
As per the Federal Register: “Under this interim final rule, entities previously defined as “domestic reporting companies” are exempted from the reporting requirements and do not have to report BOI to FinCEN, or update or correct BOI previously reported to FinCEN. With limited exceptions, the interim final rule does not change the existing requirement for foreign reporting companies to file BOI reports, but it extends the deadline to file initial BOI reports, and to update or correct previously filed BOI reports, to 30 days from the date of this publication to give foreign reporting companies additional time to comply.”
FinCEN is accepting comments on this interim final rule through May 27 via this page and intends to finalize the rule this year.
Important changes occur regularly, along with new concepts designed to enhance and regulate the franchising sector. That is why franchisors and franchisees should collaborate with a qualified NY franchise lawyer to perform legal audits of their enterprises and review compliance with existing and forthcoming laws.
Contact Lusthaus Law
Lusthaus Law’s website is a resource for New York franchisors and franchisees. We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.
