Emerging franchise brands face a set of possibilities unique from their larger and smaller competitors. Once a franchisor has established an initial core of franchisees and begun moving away from “pioneer” franchisees, the emerging franchisor has an opportunity to step back, evaluate, and adjust the system based on past history to continue and increase growth. An emerging franchisor should seek to improve its onboarding and initial training of new franchiseesRead more
We are rapidly approaching the time of year when franchise systems complete their annual FDD updates. When evaluating potential changes to the franchise agreement for 2016, prudent franchisors will consider not just the business implications, but also the relevant regulatory decisions and rulings from the prior year. Unsurprisingly, many of the major rulings from 2015 concern the joint employer question that currently looms over the franchise industry. At thisRead more
Reviewing recent cases with your franchise attorney is a great way to stay on top of emerging legal trends and avoid missteps that have recently led to liability for other franchisors. While franchise cases are being argued every day, shrewd franchisors will incorporate an analysis of key cases into their annual FDD update process to ensure that they are staying on top of developing law. The 2015 year sawRead more
No Really, They’re Not My Employees: Sharing Tips and Best Practices, International Franchise Association’s 2016 Annual Conference, San Antonio, TX, February 2016.
Strategies Related to Concerns About Joint Employment, Misclassification and Vicarious Liability, Franchise UnConference, Park City, UT, March, 2016.
A plaintiffs’ class action firm based in Pittsburgh, Pennsylvania has discovered a new shakedown method, and it’s targeting franchisors. The firm has sent numerous demand letters on behalf of unnamed and unidentified plaintiffs and demanded settlements, which include an award of attorneys’ fees. The letters primarily demand that the receiver overhaul its website to increase accessibility for the disabled. This demand rests on the Americans with Disabilities Act (the “ADA”),Read more
If you are considering purchasing a franchise, there are a few initial questions you should ask your franchise attorney before you make the initial investment. The list below includes several important topics to discuss, including questioning the registration process, the FDD itself, and industry-specific issues. Was properly disclosed with a legally compliant FDD? The FTC Rule requires franchisors to disclose certain aspects of their business and business experience in aRead more
Consider the timing and scope of the sales compliance training offered to your franchise sales personnel and for that matter, any area developers who have resale rights and responsibilities. Ask yourself whether that training is adequate in light of our incredibly litigious society and the fact that a vast majority of claims asserted by franchisees against franchisors include claims of: (1) improper disclosure; and (2) unlawful earnings claims. As I’veRead more
On January 21st, 2016, the Department of Labor’s Wage and Hour Division (the “WHD”) released its interpretation on the joint employer question. Though the WHD’s interpretation does not address franchising specifically, it provides a worrisome structure that may have direct implications for the franchise model. In the view of the WHD, joint employment may exist when an employee of one employer (referred to as an “intermediary employer”) is also, withRead more