Newsletter
FTC QUOTA SYSTEM FOR CONVENIENCE STORE FRAN-CHISES
In response to the rapid growth in the number of franchisees joining convenience store franchise chains, the Fair Trade Commission (FTC) has decided to apply a quota system to the number of new franchises it will approve. This will sim-plify application procedures and applicants' costs.
According to the FTC formula, convenience stores can henceforth apply for approval to admit new franchisees (regardless of franchise types) according to a six-monthly quota system. Where the number of existing stores in a chain is less than 300, there is no restriction on the number of new franchises; where the number of existing stores is between 300 and 600, the number of new stores joining within a half-year period must not exceed 10% of the existing number; where the number of existing stores exceeds 600, the number of new entrants within a half-year period must not exceed 10% of 600 plus 5% of the number by which the total exceeds 600. For example, where a chain already comprises 300 stores, applications for up to 30 new franchises will be considered; where there are 600 existing stores, up to 60 new franchises may be accepted; if there are 900 existing stores, the limit on new franchises is 10% of 600 plus 5% of 300, i.e. 75 new stores. A new quota must be applied for each half-year; any unused portion of the pre-ceding half-year quota cannot be carried over.