Janet Sparks's blog

ATLANTA (Blue MauMau) - The Order issued by the Georgia Court of Appeals on January 3, 2008, stating that it agreed with the franchisee's Motion to Strike Amicus Brief of the International Franchise Association is now available to review. The Order and Motion are attached below, referred to in yesterday's article: Franchise Community Awaits Amicus Decisions on Appeal

To: All Super 8 Owners and Operators

From: John Valletta, President

Date: January 7, 2008

Subject: Owners 8 Association

As many of you know, a small group of Super 8® operators has organized an independent owners group called Owners 8 Association. Because the Web site of this group has been filled with distorted, inaccurate and misleading information, I felt it was time to provide you with some facts about our brand and its programs, and to respond to some of the false and derogatory allegations being made by that group.

Writer's Note: In a letter sent to John Valletta, president of Super 8 Motels, Inc., Jay Patel, head of the Owners 8 Association, presented the top issues concerning franchisee members. The main purpose of the letter was to help Super 8 understand their position and to, hopefully, engage the company in a dialogue and discussion that will resolve the issues.

Top 4 Issues with the Super 8 Franchise System

Dear Mr. Valletta:

Writer's Note: One of the hottest topics in franchising over the past years has been whether or not the Federal Trade Commission should require franchisors to give earnings claims to prospective franchisees, prior to purchasing a unit.  Harry Rifkin gives his argument as to why earnings claims are crucial and why they should be mandatory .

Franchisee Prospects Need Financial Performance of Franchisor
By Harry M. Rifkin, Cohan, West, Rifkin & Cohen, P.C., Baltimore, Maryland Franchise Lawyer

Whether there should be Mandatory Earnings Claims (now to be referred to as Financial Performance Representations) in disclosure documents has been a subject of debate for over 15 years. When I first considered the issue, I was opposed to it because I thought that it would be impossible for the government to devise a one size fits all requirement to cover the diverse landscape of franchising and because I feared that a mandatory earnings claim would have to have so many disclaimers attached to it that it would be meaningless. However, my view has changed over the years for several reasons.

Writer's Note: In countering Harry Rifkin's opinion piece titled Earnings Claims Should Be Mandatory, Attorney David Cahn gives his opposing view. He feels the FTC took the necessary steps in the new Franchise Disclosure Documents to rectify any possible abuses that might occur in a non-mandatory structure. 

Why the FTC Got it Right – An Argument against Mandatory Earnings Claims

By David L. Cahn, Franchise & Business Law Group, Baltimore, Maryland

 The new Federal Trade Commission franchisor disclosure rules include several important revisions to the old Uniform Franchise Offering Circular guidelines. One important change that was not made, however, was to make earnings claims (now “Financial Performance Representations” or “FPRs”) mandatory. While the FTC recognized that there was a potential for abuse with its non-mandatory structure, it properly took steps to minimize this potential, rather than taking the unnecessary step of mandating FPRs.

IFA's 48th Convention in Orlando Takes New Direction

WASHINGTON D.C. (Blue MauMau) - As an attendee of the International Franchise Association's 48th Annual Convention, I feel there might be an ever-so-slight turn in the direction of this huge 48-year-old franchise vessel. Representing nearly 1,300 franchisors, 10,000 franchisees and 500 suppliers, the IFA put on an enthusiastic conference demonstrating to its 3,000 plus attendees how it lives up to its mission of "protecting, enhancing and promoting franchising." While no one can refute IFA's aggressive growth in membership and financial strength, some have questioned if such growth has the right purpose behind it. Exceeding its FY07 revenue budget of $12 million, convention reports showed how it has been able to fund updated impact studies, leadership conferences, educational programs and government relations and public relations efforts. But the main obligation the world's largest franchise trade association has to members is more difficult than that. It must constantly be proving that it equally represents the franchisor and franchisee communities.

Writer's Note:  This is a letter sent out to Toasted Subs Franchisee Association members on December 14, 2007 from the president. The TSFA is an independent group of Quiznos restaurant owners, not associated with the franchisor.  Blue MauMau received this letter anonymously. It was not a press release.

Dear Fellow TSFA Members, 

I would like to talk to you, as a fellow franchisee, about what’s going on in our business and address the legal actions you have all heard about.

First of all, I would like you to know that the Toasted Sub Franchisee Association (TSFA) is here to help franchisees be successful.  We are in no way associated with corporate Quiznos or any other organization.  We are made up solely of Quiznos franchisees.  We only exist for the benefit of Quiznos franchisees.  The reason I mention this is to clarify any confusion concerning our role.  Simply put, we are here for you and we are your advocate.

Quiznos Says Franchisee Profits to Go Up 60 Percent

Quizno's chief executive said Monday he expects franchisee profits to increase 60 percent overall in the wake of improvements to the system. [AP] - From Blue MauMau's News Picks of the Day

Today various news publications printed a Correction to the Associated Press article, Dec. 3, regarding announcements made at a meeting held by Quiznos.  

Correction to AP/Forbes Article About Franchisee Profits Rising

Part 1: Fewer FTC Disclosure Requirements Promote Changes in Broker Business

WASHINGTON, D.C. (Blue MauMau) - The Federal Trade Commission once stated, "the public record clearly indicates that franchisees who purchase franchises from franchise brokers or promoters need protection as much as those who purchase from the franchisor itself." But in spite of that observation, the FTC seems to be more lenient towards third-party brokers in revising its Franchise Rule last January. The Commission previously had not cut any slack for this industry in its regulations of disclosure documents, known as the Uniform Franchise Offering Circular, clearly identifying them as brokers. It defined brokers as "anyone who either offers or sells a franchise directly to a prospective franchisee, or otherwise arranges for the sale of a franchise." Franchisors were required to list brokers in the documents with their business background and history, the same as company officials and sales employees. The information had to include material or criminal civil actions regarding violations of franchise, securities and antitrust law, as well as fraud and unfair or deceptive practices and felony convictions.

EXCLUSIVE: An Interview with Richard Emmett

Journalist's Note: Although Quiznos has recently responded with statements to reporting on Blue MauMau, it has shied away from interviews. But this week Richard Emmett, Executive Vice President and Chief Legal Officer, granted an exclusive interview.

All Litigation Is a Distraction

DENVER (Blue MauMau) - Richard Emmett is no stranger to the restaurant industry. Not only has he been practicing law for the past 25 years, much of it in franchising, he has also been involved in restaurants since he was 13 years old. He explains, "I've put myself through college and law school working in restaurants. I've managed them, waited on tables, washed dishes and cooked. And I was a franchisee." Even today, Emmett is a franchisee of the Papa John's pizza system, where he was in-house counsel for fourteen years prior to accepting a position with Quiznos three months ago.

First and foremost, Emmett responded on how Quiznos is dealing with all the lawsuits filed recently, and how distracting it is while trying to turn the company around with a new management team. He feels the number of lawsuits is not that unusual, given the size of the company. He said, "Obviously, any company would prefer to have no lawsuits, but in my experience from a number of perspectives, it's about average." He said what is different is the type of lawsuits that are being filed, referring to several class action suits. Emmett explained that people must keep in mind that the lawsuits are requesting class status, and so far none have been granted. "Anybody can file a lawsuit, but the question is whether it will warrant a class action certification." He couldn't say how long it would take for the courts to determine the status, but from his experience he thought the process could possibly take over a year.