Advertising Law News And Analysis - June 14, 2012

Profession:Venable LLP
 
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Edited by Jeffrey D. Knowles and Gary D. Hailey

News

FTC Amends Franchise Rule Disclosure Thresholds

The Federal Trade Commission (FTC) announced on June 13 that it would amend the Franchise Rule to adjust the monetary thresholds used to determine whether a franchiser must make certain disclosures to prospective buyers. In 2007, the FTC amended the Franchise Rule to require that the disclosure thresholds be adjusted every four years based on the Consumer Price Index. The adjustments, which will be the first made under the 2007 amendments, will take effect on July 1, 2012 and exempt:

Sales where the buyer's initial payment is less than $540 (currently $500); Sales where the initial investment is at least $1,084,900 (now $1 million), excluding the cost of unimproved land and any franchisor (or affiliate) financing; and Sales to large entities, such as airports, hospitals and universities, that have been in business for at least five years and have a net worth of at least $5,424,500 (now $5 million). Click here to read the FTC's press release and Federal Register notice.

Analysis

Ben Stein / Kyocera Suit Latest Front in Endorsement Contract

Wars

In a recent post on Venable's advertising law blog, www.allaboutadvertisinglaw.com, Venable partners Amy Ralph Mudge and Randal M. Shaheen discuss the most recent decisions in a spate of lawsuits concerning celebrity endorsements cancelled by marketers after the celebrities made allegedly offensive statements.

In this most recent case, a California court ruled in a suit involving Ferris Bueller's economics teacher, a/k/a Ben Stein. The actor/lawyer/economist/public commentator had argued that the printer company Kyocera breached its endorsement agreement with him after learning of his view that global warming is not a man-made phenomenon. The court found that Kyocera had a First Amendment right to not associate itself with Stein and his alleged views on global warming.

The California court did not address the recent North Carolina Court ruling that a company needed to make a factual showing that the public had actually been offended or shocked by the endorser's conduct (read a blog post about that case here). However, Mudge and Shaheen write, the Stein case illustrates how difficult the standard proposed by the North Carolina Court - objectively measuring the effect of the endorser's statements on the public - would likely be to administer. 

Despite siding with Kyocera on the termination of the contract, the...

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