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Franchise Law

California amended its franchise relationship law in October, giving more rights to franchisees. How might these changes affect your brand, and will they spread nationwide?
  • By Cheng Cohen
  • 2,824    0
Litigation resulting from mandatory system changes can be eliminated (or at least reduced significantly!) by following these four tips.
  • By Cheng Cohen
  • 2,437    0
A new set of regulatory guidelines for franchisors provides clarity on how to present franchise opportunities to prospective buyers.
  • By Tom Pitegoff
  • 3,979    0
On July 29, 2014, the General Counsel of the National Labor Relations Board (NLRB) announced in a very brief statement that he was authorizing the issuance of formal unfair labor practice complaints against McDonald's...
  • By Marlén Cortez Morris
  • 7,269    376
We live in a world where law firms commonly have billable hourly quotas that their attorneys must meet, and substantial hourly rates as well.
  • By Carl Khalil and Sada Sheldon
  • 3,252    0
Despite all its advantages, technology has made it harder to capture consumers' attention and easier for them to bypass advertising messages.
  • By Michael Daigle and Gina Malandrino
  • 2,250    79
At last fall's Franchise Leadership & Development Conference in Atlanta, nearly 150 franchisees responded to a survey conducted by MulcahyLLP about their interface with outside counsel and legal issues.
  • By Jim Mulcahy
  • 3,276    30
In January 2012, ICANN began accepting applications for new top-level domain names.
  • By Kerry Pipes
  • 2,955    77
Many entrepreneurs and business owners embrace the idea of franchising their business and leap into the franchise model with great hopes and expectations.
  • By Beata Krakus
  • 8,439    2,295
Online marketing, social media, and social commerce have created an environment that places an increased burden on franchise marketing departments.
  • By Keith Klein
  • 8,419    931
In the previous issue, I presented observations about defects I perceived in the U.S.'s system of franchise sales regulation. The essence of my position was that having duplicative regulation at the federal and state levels adds significant costs to the regulatory system--with little improvement in the regulatory environment.
  • By Rupert M. Barkoff
  • 4,713    0
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For many franchisors with a December 31st fiscal year, now is the time to start preparing to renew their franchise documentation. The FTC rules require that the franchise disclosure document (FDD) must be updated within 120 days of the expiration of a franchisor's fiscal year. Registration states, such as New York, have an identical requirement. As a franchisor prepares to do so, that process presents an opportunity to review and improve franchise documentation, particularly the franchise agreement.
  • By Terrence M. Dunn
  • 3,275    127
Like it or not, litigation comes to virtually all franchise systems. Take a moment to see how savvy you are on franchise litigation issues based on real-world cases.
  • By Jonathan Solish
  • 3,991    410
I begin this column by stating where I am going with this piece. I am going to put franchise sales legislation and regulation under the microscope, and ask the penetrating question of whether it is, or is not, necessary. (Similar questions should be asked about franchise relationship legislation, but I will leave that for a future column.)
  • By Rupert M. Barkoff
  • 2,323    17
In the race to boost sales in a tight economy, franchisors are offering many different kinds of financial incentives to attract potential franchisees and to help their existing franchisees survive and expand. Last month, the authors provided an overview of today's economic environment, along with details on what Chick-fil-A, Saladworks, and Friendly's are doing to help franchisees obtain the funding they need. This month, they describe the programs under way at five more franchisors.
  • By Lane Fisher and F. Joseph Dunn
  • 3,412    124
All franchisors are considering how to maintain or increase market share in the new normal. Nobody can deny that the Great Recession has created more and better real estate opportunities for those who can afford to exploit them, as well as a surplus of qualified operators, composed increasingly of women and minorities, without assets to operate. The number of opportunities appears to grossly overshadow any one franchisor's resources in terms of cash, personnel, and credit.
  • By Lane Fisher and F. Joseph Dunn
  • 4,088    134
Last year when President Obama signed the Credit Card Act of 2009 (the Act") into law, the nation's attention largely focused on those provisions of the law that aim to change the way credit card companies do business with consumers. However, since the Act imposes requirements on gift card issuers, it also changed the way many retailers and franchise companies will do business with consumers.
  • By Jan Gilbert and Suzie Loonam Trigg
  • 3,197    25
As I write this piece, it is a nostalgic moment for me: 37 years of practicing law, and all with the same firm. In today's environment, inertia in law firm employment is a rare thing. If I knew then what I know today, would I have gone into private practice?
  • By Rupert M. Barkoff
  • 2,115    12
One of the significant consequences of the Internet's development is that we can gather opinions from a diverse group with minimal effort. I did so recently through a posting on the American Bar Association Forum on Franchising listserv.
  • By Rupert M. Barkoff
  • 87,904    153
Most prospective franchisees want financial performance information as part of their due diligence process when deciding whether or not to purchase a particular franchise. Prospective franchisees are understandably hesitant to invest thousands of dollars if they have no idea what kind of financial performance exists at the outlet or unit level. Financial performance information can be a powerful selling tool for franchisors because this information responds to a prospective franchisee's compelling need for information concerning the possible financial results of their investment.
  • By Brian Schnell
  • 11,766    2,257
1. Should I make a financial performance representation (FPR)? Yes! Any type of representation, oral, written, or visual, that suggests or implies a specific level or range of actual or potential sales, income, gross or net profits qualifies as an FPR. You can't make an FPR unless it is in your franchise disclosure document (FDD). Between 20 and 30 percent of all franchisors make an FPR, which means some of your competitors share their numbers with your prospects. What impression do you leave if you don't share yours? If you have solid numbers, consider making an historical-based FPR. If you do, the law allows you to make specific written representations outside the FDD about a particular location or highlighting specific variables (e.g., a kiosk variation to a traditional retail format). Without an FPR, you may not make financial representations on your website (the first place prospects check in investigating a concept) or anywhere else.
  • By Rochelle Spandorf
  • 5,273    195
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Franchise Update Media Group (FUMG) the leading industry resource for franchise development, today announced the launch of Franchise Law News, providing franchisors with a consistent source of quality legal information about the franchise industry. The print edition and eNewsletter are distributed quarterly, and online access is available anytime at www.FranchiseLawNews.com.
  • PRESS RELEASE
  • 2,078    16
It's been more than 40 years since I took my one and only psychology course. I can't say the course changed my life or showed me the light. It didn't. In fact, the only thing I really remember from it is that there are six interpretations of any two-party conversation: how Party A and Party B each perceives what they said and what they heard (that makes four); and two more, which are what I might label the truth (what Party A actually [i]did[/i] say to Party B, and vice versa). The point, of course, is that what we think we said is not necessarily what the other party thinks they heard--and further, that what we think we said may not have been what we actually said.
  • By Rupert M. Barkoff
  • 3,193    359
One of the most helpful services franchisors can provide to their franchisees is accounting direction and services. I am often astonished at how little guidance so many franchisors provide in this area. How will franchisees know if they are truly making money and operating effectively if they don't keep good books and receive information to help them run their businesses more effectively?
  • By Rupert M. Barkoff
  • 17,491    4,809
The franchise registration states require an updating of your FDD annually. This requirement necessitates the filing of a renewal application (including the revised FDD, current audited financial statements, and supplemental documents) with each registration state in which you plan to continue selling franchises.
  • By Brian Schnell
  • 6,369    714
I was shocked recently while attending a workshop covering franchisee recruitment (formerly known as "franchise sales") by the participants' responses to the following situation: Assume that the franchisor says nothing in his Franchise Disclosure Document's Item 19 as to financial performance. Instead, the franchisor suggests that prospective franchisee prepare a business plan that would include a projection of revenues and costs for the proposed franchise.
  • By Rupert M. Barkoff
  • 2,920    27
I have been a franchise lawyer my entire professional career. I still recall vividly my first project on my first day, September 8, 1987. International Dairy Queen had acquired Orange Julius of America (OJA) earlier that year, and we were updating the Orange Julius UFOC to enable OJA to continue to offer and sell franchises. We then also filed the revised UFOC in the various registration states.
  • By Brian Schnell
  • 2,355    33
Our objective with this column is to identify issues and best practices that will enable franchisors to more effectively address state registration/disclosure matters in connection with their franchise development efforts. The IFA 2009 Legal Symposium's "Ask the Regulators" session provided insight on a number of those fronts. During this session, state regulators identified several common mistakes franchisors make during the registration process, many related to the Revised FTC Rule. We discuss five of those common mistakes, with another five to be discussed next month.
  • By Brian Schnell, Partner, Faegre & Benson
  • 2,514    66
Let's look at some recent trends. The stock market: trending downward. Franchise system sales: flat or downward in well over the majority of cases. Sales of new franchises: definitely on the downturn, almost dormant. How depressing!
  • By Rupert M. Barkoff
  • 2,479    4
Let's play Jeopardy. The answer: "Document!" The question: "What is the most effective way to minimize risk in the franchise sales process?" To be honest, my answer is a form of shorthand, but it succinctly makes my point.
  • By Rupert M. Barkoff
  • 4,398    144
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