The FTC Rule was created and adopted in the mid-1970s to meet the needs of the states that required disclosure on the part of the franchisor. Essentially, it requires that franchisors furnish prospective franchisees with very specific information about themselves, their business, and the terms of the potential franchise relationship. The FTC Rule allows franchisors to comply with regulations via the Uniform Franchise Offering Circular (UFOC) in lieu of the FTC format document. A franchisor's UFOC includes legally required information about the franchisor and its franchise program. The penalties for failing to comply with the FTC Rule are severe.

The federal government's attempt to regulate franchising activity with the FTC Rule did not diminish the states' authority to do so, and was, in fact, stated to be a minimum standard on which states could add additional protection as they saw fit.