Franchise Law Archives

Jan 16, 2018

Turning a License Network Into a Franchise

Most business owners want to achieve some form of steady long-term growth. For those owners who have established a true network of licensees that are marketing goods or services under a successful brand or trademark, such growth may be accomplished through converting this license system to a franchise system. The business model to be franchised must be capable of replication and not dependent on certain unique or exceptional circumstances. The nuts and bolts of the business operation must be easily transferable to franchisees so that they may continue prior success without relying on centralized management. In the case of converting… Read more

Dec 5, 2017

Common Buyer Mistakes during Merger Upswings

Almost every business desires growth as one of its main goals and mergers and acquisitions are a traditional means of accomplishing such growth. When mergers and acquisitions are on the upswing, many companies feel the need to experience some correlative growth. However, actually achieving positive results is a challenge in itself. Here are some of the most common mistakes companies make when mergers become prevalent and the ensuing need results to keep up with competitors. It is important to utilize the advice of an attorney to avoid any of the following situations. Failing to adequately perform due diligence A business… Read more

Nov 7, 2017

Starting A Franchise: Is The Business Franchisable?

Every business owner wants his or her business to evolve whether it moves slowly in the pursuit of short-term goals or swiftly in the achievement of long-term growth. For those entrepreneurs primarily interested in the latter, franchising a business is a means of accomplishing such growth. It’s crucial that the brand of the franchise is part of a business model proven over time, and, therefore, has more than the reasonable potential to provide a successful operating prototype for franchisees. Also, the past experience of the franchisor as an owner and operator of similar businesses means the franchisee’s learning curve is… Read more

Oct 9, 2017

Franchises & Brand Development

The most important, if not essential, element of the ultimate success of a business is the development of a brand. A brand is a promise and assurance to a customer that establishes the customer’s expectation of a company’s goods and services. To truly develop a brand, a business must consistently deliver on these promises and assurances. Every business event positively or negatively affects consumers’ perception of the brand. It’s a never-ending process, a continuum. A brand should be distinctive and unique from other companies’ goods and services, as well as emblematic of a company’s self-identity, self-vision, and market perception. A… Read more

Aug 7, 2017

Private Equity’s Impact on Mergers & Acquisitions

A correlate of the notably significant global increase in the volume and value of merger and acquisition (M&A) transactions since the 1990s has been the marked increase in related private equity (PE) purchases. Although initially dominated by industry or sector focused enterprises pursuing expansion, diversification or regeneration, private equity purchases are a significant part of the M&A industry. Private equity firms and industrial or trade enterprises are the two primary types of acquirers involved in M&A. However, both maintain different approaches toward ownership based on distinct goals which affect how a transaction may unfold and what may happen after a… Read more

Jun 7, 2017

6 Must-Ask Questions Before Completing Merger & Acquisition

Franchise mergers and acquisitions are not slowing down, and the deals range from small, like the recent acquisition of Green Home Solutions by Mosquito Shield, to the $1.3 billion tender offer purchase of Popeye’s by Restaurant Brands International, the owner of Burger King and Tim Hortons. The mergers and acquisitions of franchise companies and systems involve many special considerations that set them apart from the acquisitions of other businesses. Such businesses are more than the “sum of their parts” as franchise companies subsist on a foundation built from distinctive business attributes. These include a franchised company’s intangible assets and their… Read more

Mar 27, 2017

5 Ways to Address the Legal Risks of Joint Employment

Franchisors must exercise caution in how they support franchisees on the labor front. In recent years, the franchise world has been upended by an aggressive, anti-franchise, NLRB. 2014 saw the National Labor Relations Board (NLRB) issue a series of rulings that held that franchisors might be the joint employers of their franchisees’ employees. A franchise is a trademark license that extends use of a brand while shifting costs of overhead such as labor to an independent contractor. The idea that the employees of a franchise may also be the employees of the franchisor defeats the purpose and value of the… Read more

Feb 7, 2017

What A Trump Administration Will Mean For Franchising

as published in QSR Magazine The election of Donald Trump as the next president of the United States certainly promises significant changes for the nation’s businesses. Despite the fact that many of Trump’s policies on labor and employment are still unclear, many laws and regulations promulgated during the Obama administration, including many rulings by the National Labor Relations Board (NLRB), may be challenged by the new Republican administration going forward in 2017 and beyond. Some of the more controversial rulings by the NLRB in Obama’s last administration have involved issues related to joint employers. In August 2015, The NLRB ruled… Read more

Aug 5, 2013

Franchisors Liable for Criminal Acts at Franchised Stores

In a pair of recent decisions, California courts ruled that franchisors may be vicariously liable for criminal acts occurring at their franchisees’ stores. In the first case, a California appellate court found that Domino’s Pizza could be vicariously liable for sexual harassment and assault inflicted on one of its franchisee’s employees by another employee. As the court noted, provisions in the relevant franchise agreement substantially limited the franchisee’s independence. For instance, Domino’s determined store hours, imposed advertising, signage and decor standards, handled customer complaints, and strictly regulated pricing. Furthermore, the Domino’s Manager’s Reference Guide set forth employment hiring requirements and… Read more

Apr 1, 2013

Nebraska Franchise Practices Act Amendment

Proposed legislation in Nebraska would amend the state’s Franchise Practices Act to provide that a franchisee shall not be deemed an “employee” under Nebraska law, so long as the franchisee is a party to a franchise agreement that is in compliance with the Federal Trade Commission’s Franchise Rule. As reported in earlier versions of SGR’s Franchise Newsletter, similar legislation has been enacted or introduced in other states, including Georgia. Such legislation is largely considered a response to recent court cases in which franchisees’ employees have attempted, sometimes successfully, to hold franchisors liable for workers’ compensation benefits.