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Old Grounds: A Lack of Prop 65 Warnings Brew Trouble for Coffee Franchisors

California Prop 65 warnings – many residents barely notice these anymore, as we’ve lived with Safe Drinking Water and Toxic Enforcement Act notices for over 30 years now. They appear at gas pumps; in apartment and office...more

Franchise Law: Burden of Joint Employer Just Got a Little Lighter

Direct control, indirect control…these are the employment litigation phrases that had franchisors cowering in duck-and-cover positions over the last few years. But the Department of Labor just issued a statement to breathe...more

There's an App for That: Franchisors Fight Slumping Sales, Millenials

How has the gourmet burger gone awry? According to Fox, the better burger business dropped five percent in foot traffic at quick-serve restaurants last year, primarily because consumers are opting to “DIY” their food at home....more

Franchisors, Got Claims? Don't Let Them Spoil Like Bad Cheese

This is the tale of two restaurants, each facing trademark infringement claims under the Lanham Act brought by two, separate franchisors. The franchisees’ restaurants had three things in common: First, cheese is a key...more

Franchisors: New Accounting Rules Will Significantly Impact Revenue Recognition

An updated rule issued by the Financial Accounting Standards Board (FASB) will change when most franchisors may recognize revenue on their balance sheets from the collection of initial franchise fees....more

FRANCHISEE 101: Contract Curveballs

In every Franchise Agreement, the franchisor and franchisee promise to fulfill obligations to the other. For some promises, whether or not they were performed can be a clear "yes" or "no." For example: either a franchisee...more

FRANCHISOR 101: State Taxes on Franchise Fees

Franchisors collect weekly or monthly "franchise fees." In many cases, fees are for particular services, such as marketing assistance or IT support. In franchising, the parties may be in any number of different states: for...more

FRANCHISEE 101: Special Delivery

For a relationship to meet the legal definition of a "franchise" in some jurisdictions, the franchisor must give significant assistance to, or have significant control over, the franchisee's business. A franchisor's...more

FRANCHISOR 101: Not Your Neighborhood Tesla Dealer

Among the many differences between Tesla and traditional automakers, Tesla does not sell or service its electric cars through franchised dealers; it sells direct to consumers. Recent legal challenges to Tesla's...more

Negative Reviews: Seeing Stars or Trolls? Here's What You Can and Can't Do

Trolls aren’t just fictional creatures living under bridges in fairy tales – today they are anonymous but highly visible creatures plaguing individuals and businesses on social media. They’re angry, vindictive and financially...more

Negative Reviews: Franchises Pursuing Truth, Justice, & Defamation Claims

Franchised businesses, particularly restaurants, hotels, automotive servicers and others have been falling victim to the digital age. Many consumers now choose the places they do business based on what they read on Yelp,...more

Food Fight: Two Sides to Every Chicken Filler Story

The Canadian Broadcasting Corporation (CBC) recently aired a segment reporting that real chicken content in Subway sandwiches amounted to a lot less than what the average consumer would expect. The network commissioned DNA...more

FRANCHISEE 101: Technical Disclosure Violations

The consequences to an unwitting franchisor can be severe when it fails to provide disclosure documents required by franchise law. Most franchise laws provide for rescission of the franchise agreement, allowing the franchisee...more

FRANCHISOR 101: Ostensible Agency Victory

A California federal judge dealt a major blow to employees of a Bay Area McDonald's in their effort to hold the franchisor responsible for its franchisee's alleged failure to pay wages and provide meal and rest breaks. The...more

FRANCHISEE 101: A Perpetual Franchise

When a franchisee "buys into" a franchise system by paying an "initial franchise fee," the franchisee is typically purchasing the right to use the franchisor's trademarks and business system for an initial term that lasts a...more

FRANCHISOR 101: Simplification of SBA Loan Approvals

As independent small business operators, franchisees may qualify for business loans that are guaranteed by the Small Business Administration ("SBA loans"). However, the SBA considers certain types and levels of control...more

FRANCHISEE 101: Locked In to One Approved Vendor

Franchisors often require franchisees to purchase supplies, materials, or inventory only from suppliers the franchisor approved. But where franchisors see benefits of consolidating by requiring franchisees to participate in...more

FRANCHISOR 101: Are Franchisees Your Employees?

Prudent franchisors have been reducing their apparent control over franchisees' employees to reduce the risk of becoming joint employers of those employees. But could a franchisor's control over the franchisees themselves be...more

FRANCHISOR 101: Recent “Franchisor as Joint Employer” Developments

In the last month, McDonald's settled a class action with employees of a franchisee, and a new President of the United States was elected. These two events have something in common with regard to franchising: they are...more

FRANCHISEE 101: Is It a Franchise? Yes and No

A federal court in Indiana made an interesting decision on whether a business relationship was a franchise. Wabash National Corp. is a famous maker of semitrailers. Wabash notified a dealer in Texas that its dealership was...more

FRANCHISOR 101: Original Content Needed to Protect Ops Manuals

An important part of the franchise system is the confidential operating manual. Many franchisors claim protection of operating manuals under the law of trade secrets and copyright. Keeping the contents confidential is...more

Special Edition: President of International Franchise Association (IFA) Visits Lewitt Hackman

For more than 55 years, the International Franchise Association has been committed to improving methods and business practices for all participants in franchising - whether working with the Federal Trade Commission, lobbying...more

FRANCHISEE 101: How Far Do Earnings Projections Go?

A franchisor is allowed to make "financial performance representations" in its disclosure documents. These figures may project how much money a franchisee is likely to make and can play a critical part in the franchisor's...more

FRANCHISOR 101: Non-Competes for Franchisees’ Employees

A "non-compete" provision limits the franchisee's ability, after the franchise agreement ends, to continue to work in a similar type of business to the franchise within a certain time period and geographic area. The purpose...more

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