Streamlining the SBA Approval Process with a Universal Addendum

Over the past year, many of our franchisor clients have raised concerns about the length of time that it takes for their FDD and Franchise Agreement to be approved by the Small Business Administration (SBA), which is a requirement to listing a franchisor on the SBA Franchise Registry.  Being listed on the Registry greatly facilitates the approval process for franchisees that seek SBA financing because the franchise agreement doesn’t need

Read more

Considering Whether to Eliminate Tipping at Your Restaurant

Last week at the Restaurant Finance and Development Conference in Las Vegas, a panel of restaurateurs discussed the concept of no tipping at restaurants.The panelists discussed the main benefit of doing away with tipping – that it equalizes pay among restaurant staff.  When tipping is permitted, front of house staff like servers and bartenders can often earn significantly more than the members of the kitchen staff.  This inequality can cause

Read more

Late 2016 Regulatory Update – E-Filing and Risk Factors

As we approach the end of the year, it’s time to start preparing for 2017 FDD updates and the submission of state registration applications.  Every year, the franchise registration states make substantive and procedural changes that affect this process, and franchisors and franchise attorneys that stay on top of these changes are better positioned to minimize the time that it takes to get registered. In a previous blog post, we

Read more

Delayed Revenue Recognition — A New Threat to Franchisor Financials

A recent change in Federal Accounting Standards Board (“FASB”) guidelines threatens to alter the way in which franchisors can recognize initial franchise fees in their audited financial statements.Historically, franchisors have recognized the revenue from initial franchise fees as an asset upon the opening of the franchised unit, as accountants view the initial franchise fee as consideration for the franchisor completing its pre-opening obligations. Until opening, the initial franchise fee would

Read more

Franchisors – Time To Prepare For Your Fiscal Year End

As you wrap up sales activities this fiscal year and begin preparing for an audit of your 2016 financials, we think it is important to keep in mind capitalization requirements imposed by state regulatory authorities and the effects of last minute sales on the company’s financials so that the company can avoid impound conditions or other delays in registration caused by inadequate capitalization.  Below is a brief summary of capitalization

Read more