For Restaurant Concepts, the Customer is Always Right… Even If They’re Disruptive

For Restaurant Concepts, the Customer is Always Right… Even If They’re Disruptive

A successful franchisor understands that keeping up with the ever-evolving needs and wants of the consumer contributes crucially to the company’s longevity. However, while some changes in taste are simple to identify and implement, others may require a larger, more deliberate shift in business strategy. The Boston Consulting Group has recently cautioned restaurant operators and franchisors of the impending disruption caused by third-party delivery services. Reflective of consumers’ constant desire

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Franchise Round-Up

Franchise executives and professionals recently gathered at the Union League in Philadelphia at the Franchisor Round-Up to discuss what 2017 holds for the franchise industry.  The Round-Up focused on practical changes franchisors can implement to best position their brands for the legal and regulatory uncertainties that lie in the not so distant future. Legislative Update and Outlook The Round-Up discussed the ramifications of Donald Trump’s election, with a focus on

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A Win for Franchising in Pennsylvania

For those of you following the Saladworks v. Workers’ Compensation Appeal Board pending before the Pennsylvania Supreme Court, I’m pleased to report that the Court, after briefing and argument, dismissed the appeal as “improvidently granted”.  This result leaves in place what we thought was well settled law in Pennsylvania that the franchisor is not generally liable for the acts or omissions of its franchisees. This case involved the employee of

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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

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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

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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

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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

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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

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Comments to the Commentary: Fisher Zucker’s Response to NASAA

As we mentioned in a previous blog post, the North American Securities Administrators Association (“NASAA”) published a notice of request for public commentary regarding financial performance representations (“FPRs”) that franchisors disclose within Item 19 of their franchise disclosure documents (“FDDs”).  The request by NASAA was a follow up to a similar request they made a year ago.  In both requests, NASAA has sought feedback from the public regarding a proposed

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What Strategic Buyers and Private Equity Firms Value Most When Looking at Your Franchise

What Strategic Buyers and Private Equity Firms Value Most When Looking at Your Franchise

Even if your franchise is in its nascent stages, it is not too early to organize your business for a strategic buy-out or for an infusion of private equity in the future. This is not to say that a budding franchise would be able to enter into such an agreement before proving itself; rather, much of what investors look for can be cultivated early on in the business and are

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