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Legal

Looking for answers to pressing legal questions about franchising? What’s keeping you up at night? Federal, state, and local laws affecting everything from minimum wage to employee scheduling are critical to managing your business successfully. Find what you need to know about today’s legal issues from top franchise attorneys.

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The onset of social media may have taken some by surprise, and others may have written off its arrival anticipating an equally quick departure. Whichever it may be, social media is not a passing fad and should be recognized as an integral part of marketing.
  • Keith D. Klein
  • 3,533 Reads 7 Shares
Are you someone who would you like to know the calorie count of that scrumptious three-layer cake at your favorite restaurant? Even if you're not, menu labeling is now a fact for U.S. restaurant-goers and many restaurant operators alike under the new national health care law, the Patient Protection and Affordable Care Act. Section 4205 of the Act, signed into law March 23, 2010, sets new federal requirements for nutritional labeling of foods sold at "chain retail food establishments."
  • Regina Amolsch
  • 3,208 Reads 15 Shares
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.
  • Terrence M. Dunn
  • 4,917 Reads 1,021 Shares
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.
  • Michael Laidhold
  • 3,207 Reads 48 Shares
U.S. franchisor interest in Asia seems to be at an all-time high, yet from a legal compliance standpoint it has never been more difficult to enter into many of the various Asian markets.
  • Robert A. Lauer
  • 9,114 Reads 966 Shares
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.
  • Jonathan Solish
  • 8,039 Reads 1,014 Shares
As savvy franchise companies continue to flourish in this challenging economy, FUSR will continue to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And, as the U.S. struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities.
  • Franchise Update
  • 6,057 Reads 93 Shares
There is an open debate among attorneys over the value of using social media (blogs, Facebook, LinkedIn, and Twitter predominantly) and even websites to generate business for themselves.
  • Terrence M. Dunn
  • 3,789 Reads 17 Shares
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.)
  • Rupert M. Barkoff
  • 4,405 Reads 17 Shares
Over the last several years, a number of jurisdictions have enacted legislation requiring chain restaurants to disclose caloric content and other information regarding their foods. Most commonly, caloric content must be placed on the menu board or menu near the corresponding food item
  • Anthony Marks
  • 2,035 Reads 3 Shares
Gift cards can be an important component of customer loyalty programs. They can help attract customers, driving sales and brand awareness. New federal rules governing the use of gift cards have recently gone into effect. You certainly should be aware of and comply with the new laws.
  • Jan Gilbert and Suzie Loonam Trigg
  • 8,249 Reads 198 Shares
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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.
  • Lane Fisher and F. Joseph Dunn
  • 6,269 Reads
The franchising community thinks of the FTC as the "top dog" in regulation. The FTC's Franchise Rule sets the standard for disclosure to prospective franchisees and is the basis of state regulation as well. While small by federal standards, the FTC has powerful tools at its disposal.
  • David W. Koch
  • 2,245 Reads 10 Shares
In the previous issue of Franchise Law News, Terrence Dunn and Michael Einbinder authored an article on how to strengthen your franchise agreement. This article expands on that theme, focusing on the role of the franchise agreement in the franchise system.
  • Brian Schnell
  • 9,025 Reads 10 Shares
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.
  • Lane Fisher and F. Joseph Dunn
  • 7,286 Reads 134 Shares
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.
  • Jan Gilbert and Suzie Loonam Trigg
  • 4,690 Reads 25 Shares
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?
  • Rupert M. Barkoff
  • 4,156 Reads 1 Shares
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.
  • Rupert M. Barkoff
  • 90,772 Reads 3 Shares
When the topic of international franchising comes up with clients, many are quick to dismiss the opportunities. Comments such as, "I haven't sold out the U.S. yet," are common. Some franchisors take a more inquisitive approach and ask, "What's it going to cost me?" Others want to know how quickly they can open because they want the initial fee or want to go there on vacation
  • Jeffrey A. Brimer
  • 7,305 Reads 610 Shares
Franchisors typically have developed franchise agreements that have been tailored by time and experience to address the issues that most often arise in the development of their franchised businesses. However, even the most polished agreement can benefit from a periodic review and revision. Here are five areas that frequently require attention to enhance enforcement rights, protect against competition, protect intellectual property, and protect against claims by third parties.
  • Terrence Dunn and Michael Einbinder
  • 4,669 Reads 107 Shares
In January 2007, the FTC released the amended FTC Rule on Franchising and made compliance mandatory by July 1, 2008. Since then, many of the states with franchise registration laws have also amended their laws to conform to the FTC's changes. Violations of the FTC Rule and state franchise laws can have a profound negative impact on a franchisor, its officers, directors, and sales staff, and can even lead to jail time. We thought we would take this opportunity, more than three years after the release date, to offer you a short quiz to gauge how well you remember some of the important current requirements.
  • Kenneth R. Costello
  • 8,297 Reads 1 Shares
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Last issue, we discussed growth through nontraditional franchises. Private equity firm investments of significant amounts of capital in franchisors and in franchisees represent another avenue for sales growth. Economic travails have led to the availability of sites with increased negotiating leverage for prospective tenants and experienced franchise talent. But in this tight financial market, where are the dollars to take advantage of those opportunities? We explore private equity firm concerns, what to expect in negotiations, and when franchisors should "just say no."
  • Jan Gilbert and Gayle Cannon
  • 3,969 Reads 7 Shares
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.
  • Brian Schnell
  • 22,744 Reads 8 Shares
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.
  • Rochelle Spandorf
  • 7,142 Reads 195 Shares
About two years ago, at the behest of a friend, Nick Vojnovic, president of Beef 'O' Brady's, made his first foray into a nontraditional franchise location, opening a restaurant at the TradeWinds, a resort in St. Petersburg, Fla., with 1 million annual visitors. It wasn't exactly on his radar, but Vojnovic decided to give it a go.
  • Eddy Goldberg
  • 4,391 Reads 1 Shares
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
  • 4,197 Reads 16 Shares
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.
  • Rupert M. Barkoff
  • 6,147 Reads 359 Shares
After graduating from the University of Pennsylvania and Loyola Law School in Los Angeles, Danny Sonenshine quickly found himself working as a litigator and transactional attorney at major firms in Orange County.
  • Multi-Unit Franchisee
  • 7,972 Reads
As franchisors prepare for the upcoming renewal season, increased efficiency is likely a top priority for your franchise system. Our franchise team at Faegre & Benson has identified 12 tips to help you save time and money in preparing for a successful 2010 renewal season.
  • Brian Schnell
  • 3,209 Reads 2 Shares
After graduating from the University of Pennsylvania and Loyola Law School in Los Angeles, Danny Sonenshine quickly found himself working as a litigator and transactional attorney at major firms in Orange County. It didn't take long for the Laguna Beach native to realize a few things about himself--realities that led him to leave the practice of law after six years for the very different field of franchising and restaurants.
  • Debbie Selinsky
  • 14,381 Reads 2 Shares
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