Minimum Wage and Joint Employer Issues Won't Go Away
Proponents and opponents of minimum wage increases won't stop
fighting and the main defendants of the
status quo are
Are Many Franchisors Underestimating
Startup Costs In Item 7?
Item 7 is one the more important disclosures in the Franchise
Disclosure Document, since it estimates the investment a franchisee
will make in a franchise. Here's why it gets underestimated
and why that's not good.
Are Franchisors Joint Employers?
The recent NLRB ruling that McDonald's could be a joint employer
can impact and alter franchise agreements.
Here's what to know.
Franchising in the UK
For any successful international business, expansion into the UK offers
exciting new business opportunities and growth potential. Here's what you need
to know about UK laws and franchising.
When Is A License Really A Franchise?
There are a number of businesses that operate as a license when
in fact the businesses are franchises. Here's
how to recognize a franchise
masquerading as a license.
Terminated Tutor Time Franchisee Prevails in Non-Compete
A former Tutor Time franchisee prevailed in an attempt by the
franchisor to obtain a preliminary injunction.
Read more about this case involving a
Pepperidge Farm: Distributorship or Franchise
Itís important to understand the difference between a franchise
and other business relationships. This article presents an actual
example of the difference between a
franchise and distributorship.
California Department of Corporations Sanctions Restaurant Franchisor for
Violations of California Franchise Investment Law
A restaurant franchisor in California was sanctioned and levied
financial penalties for violating the
California Franchise Investment Law.
Canadian Judge Rules Against Dunkin Donuts for Failure to
Dunkin Donuts loses ruling for failing to protect its franchisees
against competition. Judge rules
franchisees not at fault.
California Ruling Could be another Step to Franchisor Employer
Learn how a recent decision by a California court could
strengthen the basis for an
employer-employee relationship among certain franchisors and
Covenants Not To Compete: Beware of the Legalese!
Prospective franchisees need competent legal counsel to advise
them before executing their franchise agreement. Franchise contracts
include legal terminology that can fool
When Will Franchisees Be Considered Employees? Still Undecided
A number of recent court cases have involved claims by
franchisees that they were de facto employees of the franchisor. The
following court case is another example of how the question of the
under a franchise contract continues to come up.
What We Can Learn from the Cold Stone Creamery Franchise
The Cold Stone Creamery franchise is replete with a history of
problems that include franchisee lawsuits and an expose in the Wall
Street Journal. Learn why this franchise was
destined to have problems right from the start.
Franchise Agreement Negotiating Tips for Franchisees
As a franchisee youíll be bound by a franchise contract. Before
you sign on the dotted line you should be comfortable with your
franchise agreement. Here are some
suggestions for dealing with key provisions.
Scrutinizing Franchise Legal Claims
Franchisees need to carefully consider their actions when faced
with a franchisor that is seeking claims
and recourse for violations under the terms of the franchise
A Cautionary Tale On Arbitration Clauses For Prospective
The following case demonstrates why individuals considering
executing a franchise agreement in California should be cautious
regarding franchise agreements that contain an arbitration clause.
Learn why itís important to utilize
experienced franchise counsel.
Firehouse Subs Appeals Court Order in Favor of Calli Bakerís
Firehouse Bar and Grill
FranchiseKnowHow has reported on the litigation between
Firehouse Subs and Calli Bakerís Firehouse Bar and Grill.
Following is the latest on this ongoing
battle as reported by Heath Scurfield, owner of Calli Bakerís
Firehouse Bar and Grill.
China Should Enforce New Laws to Protect Franchisors
As more franchisors enter China through joint ventures and
licensing agreements itís important for the Chinese Judicial system
to enforce laws already in place to protect
the franchisor and licensee.
Item 16: Restrictions on What Franchisees May Sell
Prospective franchisees should understand their obligations under the
franchise agreement. An important requirement, which is disclosed in the
under Item 16 addresses the sales of products and services.
Required Disclosures: Obligation to Participate
Franchisees may have an obligation to actively participate in the operation
of the franchise. This issue is the basis of Item 15 in the Franchise Disclosure
Disclosures: Item 13, Trademarks
The franchise brand represents the foundation of the franchise program.
Protecting the brand through trademark registration is key. Learn why this is an
important part of the Franchise Disclosure Document review.
Required Disclosures - Item 13, Trademarks (Part 2)
In part 2 of Item 13 from the FDD, learn more about the franchisors
trademarks and related issues.
Understanding the FDD: Item 12, Territory
The foundation of a successful franchise will often rest upon the franchisee
territory and the rights that come with that territory. Prospective franchisees
need to fully understand the information that a franchisor
is obligated to provide in the FDD regarding the territory.
Understanding Required Disclosures - Item 11, Training
Franchisor training is one of the most important services a
franchisee receives. The training program serves as the foundation
for the franchisee operation. Once completed its virtually
impossible for a new franchisee to be re-trained.
Prospective franchisees need to fully
understand this important franchisor activity.
Understanding Important Requirements in Item 11
Item 11 of the Franchise Disclosure Document provides information
and disclosure relating to Electric cash registers, Computers and
the Franchise Operations Manual. Itís important
for prospective franchisees to understand what all of this means.
Required Disclosures: Advertising Issues
Prospective franchisees should understand their obligations to
advertise their franchise products and services. In addition, recognizing how the franchisor administers the advertising fund is equally important.
Does the Massachusetts Fair Franchising Act Have Legs
Senate Bill 01843 introduced in Massachusetts by legislator Brian
A. Joyce has significant implications for franchisors especially in
light of the Coverall decision. Learn
about this legislation and whether it has a chance to pass.
Required Disclosures: Pre-opening Obligations
Prospective franchisees should be fully aware of the support that they will receive from the franchisor. There is a difference between what the franchisor may promise compared to their contractual obligations.
This article adds clarity to this important aspect of the franchisee-franchisor relationship.
Franchisor’s Required Disclosures: Franchisee’s Obligations
This article presents an explanation of the section in the Franchise Disclosure Document that presents the obligations of the franchisee under the franchise agreement.
Franchise candidates should understand this important section in the disclosure document.
An increasing number of franchisors are offering some form of
financing to prospective franchisees. There is a requirement that
this information be disclosed in the Franchise Disclosure Document.
This article explains the disclosure
requirements for financing.
Disclosures: Estimated Initial Investment
Individuals looking to purchase a franchise need to be familiar
with the Estimated Initial Investment in the Franchise Disclosure
Document. This article presents a
detailed description of this important item.
Disclosure Requirements: Other Fees
Prospective franchisees need to be aware of all of the fees they
can pay to the franchisor. These fees are
presented in the FDD and should be carefully reviewed by the
The Universal Franchisee Bill of Rights
At a recent meeting the Coalition of Franchisee Associations (
CFA) ratified the Universal Franchisee Bill of Rights. Itís
important that franchisors and franchisees understand
what this document states.
Required Disclosures Ė Initial Fees: Can Provide Prospective Franchisees
with Negotiating Information
Prospective franchisees should fully understand how much the initial
franchise fee and is there an opportunity to negotiate lower fees. Itís also
important to know if the franchise fee or any portion of the fee is
refundable. Read more >>
Required Franchise Disclosures-Litigation
The litigation section in the Franchise Disclosure Document known
as Item 3 can provide a good deal of information regarding the
franchisor. Understanding this important
section is an important part of your franchise evaluation process.
Protection After You Purchase: State Franchise Relationship Laws
After performing competent due diligence and buying a franchise, the
franchisee may discover that the franchisor is not doing what they are
obligated to do. However, there is recourse available to the aggrieved
franchisee in certain States.
Does Your State Have Franchise Disclosure Laws? If Not, Then
Before searching for a franchise opportunity, itís important to understand
how the State you live in or will operate your franchise, regulates franchising.
In terms of franchise regulations some States do very little while others have
strong requirements. Read more >>
Post-Expiration Covenants Not to Compete
Franchisees need to understand the impact of certain provisions
in their franchise agreement when the agreement is terminated. One
of the most important post-expiration provisions is the non-compete.
Learn how to deal with the non-compete
US Supreme Court Decision Could Impact Franchisee Rights
A recent decision by the U.S. Supreme Court pertaining to a case
involving AT&T could have an impact of class action claims brought
by franchisees. Click here to learn
Unconscionable Clauses In Franchise Agreements
Prospective franchisees with the aid of their franchise attorney should
challenge problematic clauses in the franchise agreement through
pre-contract negotiation, rather than through the courts.
validates the importance of having a qualified franchise attorney review the
franchise contract before itís executed.
Personal Guaranties in Franchise Agreements: to Sign or Not to Sign
Prospective franchisees should be aware of the personal guaranty and its
implications. This article presents an overview of the personal guaranty and
the reasons why caution is the word.
Avoid Becoming a Victim of Franchise Fraud (Part 2)
Franchise candidates should know how to use the information in Item 20 of
the Franchise Disclosure Document. Contacting former franchisees and
obtaining information may be more difficult than appears.
Read more >>
Avoid Becoming a Victim of Franchise Fraud (Part 1)
Part one of this two part article provides insight into the importance of
Item 20 in the Franchise Disclosure Document. Understanding Item 20 and how
to use the information is an important component of a prospective
franchiseeís due diligence.
Can a Franchisor Collect Future Royalties When a Franchise
Agreement is Terminated?
Some franchisors have become much more aggressive in attempting to
collect future royalties from franchisees that have been terminated.
This article explains how franchisor claims
for future royalties may or may not be awarded.
Precise Compliance With Notice Provisions Essential for Franchisors
This article by Craig R. Tractenberg of Nixon Peabody appeared in the
Legal Intelligencer. He uses a recent judicial decision involving Dominoís
Pizza to emphasize the importance of franchisorís providing timely and
proper notice to its franchisees and updating the operations manual to
reflect operating changes. Read it here >>
When Is a "License" Really a "Franchise"?
The Federal Trade Commission Franchise Rule, 16 C.F.R. 436.1 et seq.,
governs, at a federal level, disclosures which a "franchisor" must provide
to each prospective franchise. There are also numerous state laws
which may apply in any given situation. The discussion in this article
will be limited to the requirements under the Franchise Rule.
Helpful Tips When Drafting or Revising a Franchise Agreement
New Franchisors as well as existing franchisors may need to consider
changes to their franchise agreement. Before any changes are made its
important to know what your competitors are doing. In addition, franchisors
need to be aware of objections to certain provisions of the current
agreement, made by prospective franchisees and their attorneys.
Read more >>
KFC Franchisees Ad Council Receives Favorable Ruling Over KFC Corp.
The KFC advertising council can claim victory over franchisor KFC,
regarding the final approval and control of domestic advertising programs.
Read a summary of the case and ruling.
Five Key Tips for Franchising Your Business
Before deciding to franchise an existing business itís important to
answer some key questions. Veteran franchise attorney, Harold Kestenbaum,
presents five tips that need to be considered before franchising a business.
Follow up to Rock Music Franchising Decision- Significant Reward in
Favor of Franchisor
In a previous article on the FranchiseKnowHow web site, Craig Tractenberg
of Nixon Peabody reported on a favorable ruling on behalf of the NP client,
Paul Green School of Rock Music Franchising (PGSORM).
Here's an update on that case.
Defining Sub-Franchising Once and For All
Sub-franchising is often a misunderstood term and is frequently
confused with other franchise structures.
This article puts any confusion to bed
by providing the true meaning of the term.
Important Ruling for California Franchisors
Franchisors that conduct business in California need to be aware of
issues regarding arbitration provisions.
Read about this recent court ruling.
Franchisees File Law Suit Against Edible Arrangements
Edible Arrangements the franchisor that sells floral like designs from
sculpted fresh fruit has been sued by a group of franchisees.
details of this story.
Century 21, NY Brokerage Franchisee to Litigate
Century 21 has been sued by its top producing New York area
franchisee. The franchisee operates from fourteen offices.
Read more about this recent development.
Choice of Law and Forum Clarified in Recent
This article on choice
of law and forum provides insight into non-compete provisions in
franchise agreements as regards California law. Franchisors and franchisees
will find the results of these recent decisions helpful.
The Franchise Contract: Understanding the Personal Guaranty
One of the most important provisions of a franchise agreement is the
personal guaranty. Itís important for prospective franchisees to fully
understand the reason why franchisors require this covenant and what the
implications are in the event the franchisee has problems.
franchisor due diligence, keep this factor in mind.
Just How Exclusive
is an Exclusive Territory?
Itís important for franchisees to understand what rights they
have when they purchase a franchise and receive a specific
territory. This article provides a concise
explanation of what exclusivity means when it comes to a franchise
Burger King Management and its
Franchisees Battling for Six Years
article by Richard Gibson of the WSJ describes the six year
battle being waged by Burger King Franchisees and franchisor
The Importance of
Using a Franchise Attorney
Before you sign the
franchise agreement and write the check, make sure youíre using a
franchise attorney to represent you and guide you along the way.
Find out why itís so important to
use a franchise attorney and the benefits youíll receive.
When buying a franchise,
you'll be expected to sign a franchise agreement. Don't assume that
everything in the contract is set in stone. Often there is room for
negotiation. Follow these steps to be sure you are comfortable with
all the provisions before you sign
the franchise agreement.
Why You Need A Qualified
If you think you can
purchase that franchise of your dreams without the assistance and
expertise of a lawyer who specializes in franchise law, think again.
Learn the what, who, why, when, how and where's of
finding and using the services of a qualified
Is your franchise renewal agreement a
ticking time bomb? The renewal agreement you'll have to sign may be
very different than your original agreement. Here's what you
should know about franchise renewal
Protect Your Franchise
Exclusive territories in the franchising
industry give franchisees assurance that a direct competitor won't
open up from them just a couple of blocks away. But hold on -- your
territory might not be as safe as you think it is. Find out the
steps you need to take in order to help
secure your franchise territory.
Employment Status of Franchisees
On March 23, 2010, a federal judge in Boston, ruled that a commercial cleaning franchisor was the “employer” of its Massachusetts franchisees. The franchisor was ruled to have violated the Massachusetts Independent Contractor Act by “misclassifying” the franchisees as “independent contractors.” This ruling could have serious repercussions to the franchising industry in Massachusetts and other States.
Read about this ruling in the
Nixon Peabody Franchise Law Alert.
Supreme Court Ruling in the Hertz case Defines Principal
Place Of Business
In a recent decision
involving the Hertz Corporation, the U.S. Supreme Court ruled that,
with few exceptions, a corporationís principal place of business is
the place where its officers control and manage the corporationís
activities. As an example, corporations sued in California
State Court but headquartered in another state can more easily move
the case to federal court. Read about the importance of the
this article from the Nixon Peabody newsletter.
Area Developers Need to Register As A
Franchise in Washington State
The Washington Court of Appeals recently
(March, 2010) refused to review a lower court case in which a
franchisee was allowed to rescind its franchise agreement
because an area developer who had recruited the franchisee was
considered by the state to be a sub-franchisor and had not
registered in the state as a franchise. The refusal to review
the case could have widespread negative impact on franchisors.
For details of the story, see the
DLA Piper newsletter.