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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The Third Circuit is Opening the Doors for Franchisees to File Class-Actions Under the WPCL

The Third Circuit Court of Appeals recently affirmed a lower court’s decision to permit a group of franchisees to file a class action lawsuit against a franchisor; a decision that could potentially lead to franchisees being deemed employees of a franchisor. In the matter of Darryl Williams; Howard Brooks v. Jani-King Of Philadelphia Inc., et al., No. 15-2049 (3d. Cir., September 21, 2016), two Philadelphia area Jani-King franchisees brought claims

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Onboarding New Franchisees

The onboarding process often comes down to the franchisor attempting to pack as much information as possible into the training session and overwhelming the franchisee. In order to have a less frustrating and more meaningful orientation process, however, onboarding should begin as early as the recruitment stage. This includes imparting the vision and the culture of the business upon prospective franchisees early on, as well as managing their expectations. Transparency

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Making Sure Your Opportunity is Bankable

One of the most repeated pieces of advice given to emerging franchisors is to make sure that the first twenty franchise units have as few financial problems as possible. The strength or weakness of the initial franchisees will be what the franchisors will be reporting in their Item 19’s for years to come, and it has enormous long-term impact on the value of the brand. It can ultimately impact future

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Technology Solutions for Emerging Franchisors

Some of the more difficult decisions facing emerging franchisors involve technology — the level of development needed in the early stages of growth; which types of systems to tackle first; and whether to buy from outside sources or to build platforms internally.  Often, significant up-front costs must be balanced against the multitude of advantages that are enjoyed by an advanced, integrated technology system.   A recent study by the Boston

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Growth in a Franchise System: Maximizing Unit Level Economics

It starts at the top, with you – the franchisor: implementing an efficient system; instilling the culture; providing units the tools to succeed. A vital aspect of each of these components is communication. Franchisors must communicate with their franchisees beyond providing them with marching orders. Franchisees are much more likely to embrace your decisions and buy into an idea if they understand the rationale behind them.   In general, make

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Landing the Big Fish: Selling Multi-Unit Deals

Emerging franchisors often view multi-unit deals as a golden egg. However, before jumping into such a commitment, a franchisor should take some time to self-reflect and consider, “Is this right for me?”   Multi-unit sales will only succeed if every aspect of a franchise is compatible with integrating and implementing multi-unit deals. The ability to handle multi-unit deals needs to starts at the grassroots level of the organization. It needs

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A Step in the Right Direction: NASAA Releases New Item 19 Commentary

A Step in the Right Direction: NASAA Releases New Item 19 Commentary

Last week, the North American Securities Administrators Association (“NASAA”) published a notice of request for public commentary regarding financial performance representations, or “FPRs”, that a franchisor discloses in Item 19 of its FDD.  The commentary aims to create a set of guidelines that will control how franchisors are permitted to disclose financial results in its Item 19, by prohibiting certain types of FPRs and requiring additional support or information in

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