Log In / Register | May 22, 2012

Still Undecided, When Will Franchisees Be "Employees"

On February 16, 2012, the United States District Court, Northern District of California, granted the Plaintiff's motion for certification and stayed the action pending resolution of the interlocutory appeal before the Ninth Circuit in the matter of Juarez v. Jani-King of California, Inc.

Zee Association Lawsuit Survives Motion to Dismiss

On July 19, 2011, the United States District Court, District of Connecticut, Warren W. Eginton, Senior District Judge ruled that EA Independent Franchisee Association, LLC ("plaintiff") could proceed with its lawsuit against Edible Arrangements International, Inc. ("EA") , and certain affiliates thereof (collectively, "defendants").

Franchising in India

As one of the world's largest and fastest growing markets, India has become an attractive possibility for expansion by U.S. franchisors. It provides an excellent franchise opportunity for qualified franchisors.

China Wants Rule of Law

In late October 2011, the Information Office of the State Council in China published a white paper entitled "The Socialist System of Laws with Chinese Characteristics."

Initial Fees Can Provide Prospective Franchisees With Negotiating Information

Pursuant to the Federal Franchise Rule, 16 C.F.R. 436, a franchisor must disclose to a prospective franchisee the initial fees and any conditions in which the fees are refundable.

Litigation that Franchisors Must Disclose

Disclosure must be made as to the franchisor; a predecessor, a parent or affiliate who induces franchise sales by promising to back the franchisor financially or otherwise guarantees the franchisor's performance.

Does Your State Have Disclosure Laws?

In addition to the Federal Trade Commission's laws regarding the sale of franchises, fifteen states have franchise investment laws that require franchisors to provide pre-sale disclosures, known as "offering circulars," or "franchise disclosure documents," to potential purchasers: California, Hawaii, Illinois, Maryland,

Should I Sign a Personal Guaranty in a Franchise Agreement?

Obtaining personal guarantees from franchisees has become the standard business practice in the franchise industry.

Can Franchisors Collect Future Store Royalties When an Agreement Is Terminated?

In the seminal case of Postal Instant Press, Inc. v. Sealy (“PIP”), 43 Cal.App.4th 1704, 51 Cal.Rptr.2d 365 (1996), the court determined that the franchisor was not entitled to future royalties because it found that the franchisee's breach of the franchise agreement was not the proximate cause of the franchisor's loss of such royalties.

Protection After the Purchase, State Franchise Relationship Laws

Sixteen states have laws that protect franchisees from certain unfair and capricious acts by a franchisor during its relationship with its franchisees.