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SMALL BUSINESS ADMINISTRATION REPORT CAUTIONS AGAINST ADDITIONAL GOVERNMENT REGULATION OF FRANCHISING INDUSTRY

 WASHINGTON, July 27 /PRNewswire/ -- The International Franchise Association issued the following:
 A recent study initiated and sponsored by the U.S. Small Business Administration recommends that federal and state governments "should avoid extensive government regulation of franchising relationships" because existing laws and regulations provide adequate protection for franchisees. Additionally, the SBA cautions that new regulations may increase the regulatory burden and costs of franchising.
 The SBA study concludes: "Rapid rates of growth in franchising over the past two decades and recent surveys of franchisees suggest that current regulations have created an environment that is conducive to franchising and made franchising an attractive alternative for business expansion ..."
 The study also cites trends and data on franchising. Among the statistics: Annual U.S. retail sales could reach $1 trillion by the year 2000. Currently, total franchising sales are more than $800 billion and are expected to increase by 6 to 8 percent in 1993.
 Also noted are franchising trends between 1975 and 1988, during which the number of business format franchise establishments double from 1,115 to 2,239. During the same period, franchising employment doubled from 3.5 million to 7 million people.
 The SBA report -- noting that 62 percent of franchisees are single- unit owners and therefore "small businesses" -- also recommends:
 -- The Federal Trade Commission should continue efforts to improve and streamline financial disclosure forms and encourage the use of earnings claims by franchisors.
 -- The FTC and state agencies should better coordinate review and enforcement efforts involving sales and disclosure.
 -- The U.S. government should re-establish its annual survey of franchising in the economy.
 -- SBA and U.S. Minority Development Business Agency should expand financial assistance programs for franchisees; franchisors should examine new methods of securing financing for prospective franchisees.
 -- The study, citing ongoing efforts by the International Franchise Association, suggests that the private sector continue to fund, publicize and provide information and programs to the franchise community and the general public on franchising.
 "This SBA study underscores what the International Franchise Association has stated previously -- that self-regulation of the industry, not over-regulation -- is the best way for franchising to continue its phenomenal growth," said IFA President William B. Cherkasky. "This report also calls for greater support for and enforcement by the FTC, a move that has been vigorously supported by IFA."
 -0- 7/27/93
 /NOTE: For more information on this study, call the contact below./
 /CONTACT: Andy Trincia, public relations manager, International Franchise Association, 202-628-8000/ CO: International Franchise Association; U.S. Small Business
 Administration ST: District of Columbia IN: SU:


TW-MH -- DC021 -- 6266 07/27/93 13:09 EDT
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Date:Jul 27, 1993
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