AP NEWS
ADVERTISEMENT

Cortez Masto calls for tighter franchise industry oversight

April 13, 2021 GMT

LAS VEGAS (AP) — U.S. Sen. Catherine Cortez Masto of Nevada released a report from her office on Tuesday detailing corporate practices that she said treat franchise owners unfairly and sometimes leave them facing huge losses.

The Democratic senator, who is running for reelection next year, said in the 87-page report that she asked her staff to analyze the industry after hearing reports of problems in the industry at a Senate hearing in 2019.

She said franchise businesses with a successful brand can seem like an ideal opportunity for entrepreneurs but some people who pour their life savings into their franchises can lose everything because of deceptive and misleading corporations and lenders. She cites inflated revenue projections, overcharges, misleading contracts and mandatory arbitration causes as some of the practices that franchise owner can face.

ADVERTISEMENT

The senator says Congress can ensure enforcement agencies such as the Federal Trade Commission are fully staffed and strengthen laws to improve the process, such as require that corporations disclose accurate costs and performance data for franchise brands to any potential owners that seek federally-guaranteed loans. Cortez Masto says she’s planning to introduce legislation requiring that this month.