Finance Law

Recently, Groupon and LivingSocial, two leaders in daily deal website offerings, have been hit with multiple lawsuits. These complaints allege that the sale of online prepaid discounted coupons with short-term expiration dates is illegal under the federal Credit Card Accountability Responsibility and Disclosure Act of 2009 and the Electronic Funds Transfer Act of 1978, as well as under similar state laws. The plaintiffs claim that the coupons are gift certificates under federal and state laws, and are therefore subject to federal and state law limitations on expiration periods.
Groupon and LivingSocial operate websites that allow consumers to purchase discount coupons for products and services. Purchasers pay a specified amount of money, and in return receive a redeemable coupon...

The current "credit crisis" should not have to be a major obstacle for franchisors and franchisees seeking to expand their businesses. To reach an effective solution, it is necessary to examine the relationship paradigm between the lender, franchisor, and franchisee with a goal toward creating greater awareness and understanding of the objectives of all involved.

Among the interests represented in every franchise lending transaction (franchisor, franchisee, and bank), there are certain common approaches. For one, each entity conducts an assessment of the deal terms and monetary performance and examines the potential returns. Essentially, the lender, franchisor, and franchisee are each attempting to determine whether they will assume the risk of working with the other parties...

Franchise systems must stay dynamic, not static. Reduced recessionary spending demands introduction of new product assortments and pricing programs. Decreases in franchisees' financial performance mandates a product line adjustment. Whether driven by external or internal forces, every franchise system must be prepared to adapt to remain relevant, viable, and competitive.
Once a franchisor determines that change is necessary, it faces the challenge of implementing that change throughout the system. How it approaches such change could determine whether the franchisor wins or loses that challenge.

Franchisors and franchisees who accept credit or debit cards as payment from consumers are familiar with--and likely disdainful of--the fees that card issuers and banks charge for those transactions. The largest component of these fees are called "interchange fees," which are fees that card-issuing banks charge to a merchant or retailer's bank in exchange for processing the transaction. Interchange fees (along with other small fees) are then passed along to the retailer or merchant. In this way, interchange fees affect the prices that many businesses charge to consumers for goods and services.
Credit card networks set interchange fee amounts, but these fees can vary depending upon the type of card, the size of the business (larger companies are often able to negotiate lower rates), the type of transaction, and even the location of the business...