Consider the timing and scope of the franchise sales compliance training offered to your sales personnel and 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.
With respect to the latter, the most recognized franchisee litigators claim that, in the absence of an earnings claim, they can find some affirmative statement or admission that could arguably give rise to a claim, given that federal and state laws have created an incredibly expansive definition of conduct which could constitute an earnings claim. Moreover, most improper disclosure claims are predicated on a failure to give the franchisee an updated document reflecting material changes, updating earnings claim information where required, a failure to use the properly registered document in registration states, and failing to document the making of timely disclosures, the lack of any earnings claims and any negotiated changes.
Given the recurring nature of these claims, we offer our franchisor clients franchise sales compliance seminars, onsite or locally. We use a proprietary comprehensive workbook known as the Franchise Sales Desk Reference, which includes modules on registration and disclosure, earnings claims, advertising, compliance certifications, negotiated changes, misrepresentation and omissions (the “Program”). We have also developed an optional pre-test designed to determine a person’s level of knowledge going into the Program and a test at the conclusion of the Program to determine the proficiency level at the conclusion of the Program. Essentially, we can tailor a franchise compliance training program to your specific needs, based on your availability, in a manner which maximizes the number of participants from your organization who can attend. For example, if you do not use an earnings claim, we will consult with you with respect to specific measures of performance or an alternative means of casting your data, in an effort to cast your opportunity in the most favorable light. If you use an earnings claim, we can assist you in defining the information which must be included in the claim and the permissible uses of the claim.