A franchisor may violate the FTC Franchise Rule by delivering a Franchise Disclosure Document late or making earnings claims outside Item 19. Buyers often assume that such a violation creates a federal claim. It does not. The Rule sets the disclosure standard for most U.S. franchise sales, but only the Federal Trade Commission can enforce it.
H.R. 4614, the Franchisee Freedom Act, would change that. Introduced by Rep. Jan Schakowsky on July 22, 2025, the bill would let harmed franchisees sue for Franchise Rule violations, seek damages or rescission, recover attorneys’ fees, and challenge limits on franchisee associations.
The Current Rule
The Franchise Rule, 16 C.F.R. Part 436, applies to most U.S. franchise offers and sales. It requires franchisors to provide the FDD at least 14 calendar days before the buyer signs or pays money. If the franchisor makes a material unilateral change, the buyer must receive the revised documents at least seven days before signing.
The Rule also bars franchise sellers from contradicting the FDD, making unsupported financial performance representations, making earnings claims outside Item 19, or requiring a buyer to waive reliance on the FDD.
A violation is an unfair or deceptive act under Section 5 of the FTC Act, but the Rule creates no private right of action. For example, in A Love of Food I, LLC v. Maoz Vegetarian USA, Inc., 70 F. Supp. 3d 376 (D.D.C. 2014), the court explained that the FTC may sue to stop nondisclosure, “but no private right of action is available to franchisees under these regulations.” Earlier cases reached similar conclusions.
A harmed franchisee must rely on other legal theories, usually a state franchise statute or common law fraud claim. In a state without a franchise sales statute, a timing violation alone may provide no remedy unless the facts also support another claim.
What H.R. 4614 Would Do
- Private right of action. A harmed franchisee could sue for violations of Part 436 or the bill’s association provision. The text is not limited to franchisors; brokers and other franchise sellers could face claims.
- Remedies. A successful claimant could recover actual damages, equitable relief including rescission, and reasonable attorneys’ fees and costs.
- Home-state venue. A franchisee could sue in the federal district where the franchisee lives, or in state court in that same state.
- Association rights. A franchisor could not restrict franchisee association activity or retaliate against a franchisee for participating.
Why It Matters
The private right of action is the core of the bill because it would allow franchisees to sue directly rather than wait for FTC enforcement. The bill would also strengthen franchisees’ position in other important ways.
A home-state venue provision would lower filing costs, and the availability of attorneys’ fees could make lower-value claims economically viable.
Rescission would help when damages are difficult to prove. A new franchise may close before it produces reliable profit data. Unwinding the deal could return franchise fees, buildout costs, and equipment expenses, subject to the court’s discretion.
That said, the bill does not expressly void forum-selection clauses, so franchisors would likely argue that existing forum provisions still apply despite the new venue right.
The association provision would also create a national baseline by prohibiting restrictions and retaliation tied to franchisee association activity.
What the Bill Leaves Out
The bill does not address arbitration. Franchise agreements often require individual arbitration and waive class claims. Without an anti-waiver clause or language overriding the Federal Arbitration Act, those provisions would likely remain enforceable.
Where the Bill Stands
The House referred H.R. 4614 to the Judiciary Committee on July 22, 2025. The bill has four Democratic cosponsors, no Senate companion, and no reported hearing or markup. Notably, this is Rep. Schakowsky’s third version of the bill since 2022. Earlier versions did not advance out of committee.
The bill’s prospects for passage remain limited. Republicans control the House, and the Judiciary Committee has not scheduled any action. If H.R. 4614 remains in committee when the 119th Congress ends on January 3, 2027, it will expire and must be reintroduced in the next Congress.
What Franchisees Should Do Now
For now, H.R. 4614 is not law. Available remedies must still come from other causes of action, such as state franchise statutes, common-law fraud, and FTC complaints. Those state-law remedies continue to evolve, sometimes in franchisees’ favor: Virginia’s ban on post-termination noncompete provisions in franchise agreements took effect on July 1, 2026, and Maryland’s franchise law amendments take effect on October 1, 2026.
Bottom line: The FTC Franchise Rule still gives franchisees no private federal claim. H.R. 4614 would add one, but the bill remains pending and would not necessarily defeat arbitration clauses or class waivers.
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