en Apricot Lane Franchisee Leaves Franchise, Judge Disallows Franchisor to Lease Space <!-- google_ad_section_start --><p><img alt="Apricot Lane" src="" style="width: 319px; margin-left: 5px; margin-right: 5px; float: right; height: 180px;" width="319" height="180" />A nine-unit franchisee of the Apricot Lane chain of women&#39;s boutiques has broken away from the franchise, and a federal court has denied the franchisor the right to take over the lease at a franchised location.</p> <!--break--><!--break--><p>The franchisee, Joli Grace, LLC, sued the franchisor, Country Visions, Inc., last May in federal court in Sacramento, seeking a declaration that the franchisor&#39;s non-compete clauses were not enforceable and that the franchisor had breached the franchise agreements, freeing the franchisee of its contractual obligations. Country Visions counterclaimed, alleging that, among other things, the franchisee had stopped paying royalties in June for all nine outlets. The franchisor also raised claims against Joli Grace&#39;s owners and affiliated companies, claiming that they had caused and participated in the breaches, and were seeking to have the franchisees break away to join the affiliate&#39;s brand, Blu Spero.</p> <p>Joli Grace raised the stakes in September, and converted all nine stores to the Blu Spero name. Country Visions then sought a preliminary injunction to compel the franchisee and Blu Spero to turn over the lease at a location in Hattiesburg, Mississippi, to cease operating as Blu Spero and to cease using the Apricot Lane trademarks. After a hearing in November, the court dismissed all of the claims against the owners and Blu Spero affiliate, and denied the preliminary injunction in all respects. On the lease turnover, the Court noted that Country Visions was asking for a &quot;mandatory injunction,&quot; and had failed to meet the higher standards required for that relief. Country Visions argued that the Hattiesburg landlord would accept an assignment of the lease to it, but, the judge noted, &quot;The Hattiesburg landlord is not before the court,&quot; and that without the landlord, the court could not compel the assignment. The court denied the request that Blu Spero cease operating, since it had been dismissed it from the suit, and denied the request to enjoin use of the Apricot Lane trademarks because there was no record evidence of infringing use.</p> <p>&quot;The case raises the question of whether a system that has little in the way of uniformity or value for the franchisee has anything to protect,&quot; said Michael Garner, counsel to the franchisee. &quot;Apricot Lane stores are free to stock whatever they want, there&#39;s no national advertising, no unique product lines, and support comes mainly from other franchisees.&quot; Country Visions&#39; 2016 FDD showed that 46 stores had &quot;ceased operations for other reasons&quot; since 2014.</p> <p>Garner added that since the court&#39;s decision, the Blu Spero stores have filed for Chapter 11 for unrelated reasons.</p> <p>Apricot Lane Boutique was founded in 2007 by Ken Petersen, and its 75 franchised retail stores are supported by franchisor Country Visions, Inc. The parent company opened its first retail gift store in August 1991 in Vacaville, California.&nbsp;&nbsp;&nbsp;&nbsp;</p> <!-- google_ad_section_end --><table id="attachments" class="sticky-enabled"> <thead><tr><th>Attachment</th><th>Size</th> </tr></thead> <tbody> <tr class="odd"><td><a href=" Memo &amp; Order to Mot to Dismiss 1st Amended CC &amp; Mot PI (Filed 11-30-16).pdf">Memo &amp; Order to Motion to Dismiss 1st Amended CC &amp; Mot PI (Filed 11-30-16).pdf</a></td><td>213.01 KB</td> </tr> </tbody> </table> Legal judgment & dispute resolution Apricot Lane lawsuit Blu Spero breach of franchise agreement Country Visions Joli Grace non-compete clause Thu, 23 Feb 2017 04:48:46 +0000 Janet Sparks 15766 at Restaurant Brands to Buy Popeyes for $1.8B <!-- google_ad_section_start --><p><img alt="Popeyes" src="" style="width: 320px; height: 180px; float: right; margin-left: 5px; margin-right: 5px;" />After leaks over the last few days that Popeyes was in negotiations to be bought, then subsequent reports that it wasn&#39;t, Restaurant Brands International Inc. (RBI), the parent firm of franchisors Burger King and Tim Hortons, announced this morning that it has reached an agreement&nbsp;to&nbsp;acquire Popeyes Louisiana Kitchen Inc. [NASDAQ: PLKI] for $1.8 billion.</p> <!--break--><!--break--><p>RBI will finance the deal with cash on hand and financing commitments from the J.P. Morgan and Wells Fargo banks. The deal awaits regulatory approvals and the successful completion of the tender offer. The company expects to close by early April 2017.</p> <h3><span style="color:#A52A2A;"><strong>A push to consolidate administrative and franchise support? </strong></span></h3> <p>For American franchise owners, restaurant unit economist John Gordon warns, &quot;Restaurant Brands paid 19 times EBITDA for Popeyes. That is expensive.&quot; He thinks that the high acquisition price of Popeyes will produce long-term economic pressure for cost savings by&nbsp;its new owners. Gordon, the&nbsp;principal of San Diego-based Pacific Management Consulting Group, points out that the majority shareholder of Restaurant Brands, Brazilian private investment firm 3G Capital, has a history&nbsp;of reorganizing and shrinking&nbsp;supporting administrative personnel in companies they acquire.</p> <p>Founded in New Orleans in 1972, the relocated Atlanta, Georgia-based Popeyes is the franchisor of almost 2,559 franchised restaurants as of its 2016 third quarter report. About 3 percent of the restaurants in its chain are company-owned.</p> <p>&quot;RBI has observed our success and seen the opportunity for exceptional future unit growth in the U.S. and around the world,&quot; said Cheryl Bachelder, who has served as Popeyes CEO since November&nbsp;2007. &quot;The result is a transaction that delivers immediate and certain value to the Popeyes shareholders,&quot;&nbsp;she stated.&nbsp;Bachelder&nbsp;has helped turn the formerly troubled chain to its current lofty heights.</p> <h3><span style="color:#A52A2A;"><strong>Strong industry demand for Popeyes leaders </strong></span></h3> <p>Gordon thinks Bachelder&#39;s days could be numbered. Schwartz of 3G Capital quickly took over the CEO duties of its past acquisitions. &quot;After the purchase by 3G, the then-existing chief executive of Tim Hortons, who was a new CEO, and Burger King&#39;s chief executive exited,&quot; says Gordon of 3G&#39;s takeover history. &quot;Will Schwartz be the CEO for now a third brand, Popeyes? That would be too much for one leader,&quot; comments Gordon.</p> <p>The company made no indication today that Popeyes CEO would be going anywhere.</p> <p>&quot;Whatever happens to the CEO, the future is very bright for Cheryl Bachelder,&quot; observes analyst Gordon. He points out that there are a number of troubled systems that could use her leadership and turnaround skills. &quot;For example, the CEO of troubled DineEquity just resigned,&quot; says the restaurant analyst. The casual dining franchisor is urgently searching for the right chief executive to lift its IHOP chain and turn Applebee&#39;s&nbsp;around.</p> <p>The unit financial analyst also speaks about how Popeyes has recruited top-notch information technology leaders to migrate from many point-of-sales platforms to a unified, pioneering point-of-sales system in the future. He thinks these leaders will easily find new opportunities.</p> <p>&quot;There is high demand in the industry for such technology leadership,&quot; says Gordon.</p> <h3><span style="color:#A52A2A;"><strong>Opportunities abroad </strong></span></h3> <p>Restaurant Brands International [NYSE:QSR] stated that Popeyes will be managed independently in the United States. It plans to continue expanding the brand not only in the mature U.S. market, but also in international markets.</p> <p>&quot;With this transaction, RBI is adding a brand that has a distinctive position within a compelling segment and strong U.S. and international prospects for growth,&quot; says&nbsp;Daniel Schwartz, chief executive officer of RBI, about the acquisition. &quot;As Popeyes becomes part of the RBI family we believe we can deliver growth and opportunities for all of our stakeholders, including our valued employees and franchisees. We look forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the U.S. and around the world.&quot;</p> <p>Franchisees are likely to see a shift to an international focus, according to Pacific Management&#39;s Gordon. He sees some synergy between Popeyes&nbsp;and Burger King&#39;s international developers. &quot;Now there is an additional brand for the development wants of Burger King&#39;s existing international licensees,&quot; says Gordon.</p> <hr /> <p><strong>Related reading</strong>:</p> <ul> <li><a href="" target="_blank">Former Popeyes CMO joins Church&#39;s Chicken</a> | QSR magazine, Feb 22, 2017</li> <li><a href="">Burger King, Tim Hortons in Final Talks to Buy Popeyes: Note to Franchisees</a></li> </ul> <p>&nbsp;</p> <!-- google_ad_section_end --> Mergers & Acquisitions Tue, 21 Feb 2017 22:27:44 +0000 Don Sniegowski 15762 at Jury Awards Widow of Subway CEO Fred DeLuca $2.9M-plus in Failed Florida Land Deal <!-- google_ad_section_start --><p>After seven and a half hours of deliberation, a Palm Beach County jury in Florida awarded $2.9 million to the widow of the late Fred DeLuca, co-founder and CEO of Subway sandwich chain, over a failed real estate deal with Delray Beach developer Anthony Pugliese III.</p> <!--break--><!--break--><p>The month-long multi-million-dollar trial was described by the media as one where the two business titans took turns blasting the morals of each other through aggressive attorneys. Rick Hutchison of Holland &amp; Knight, lead counsel for the DeLuca estate, asserted Pugliese &quot;is a liar, a thief and a fraudster.&quot; He claimed Fred DeLuca lost $43 million in the &quot;green community development&quot; project south of Orlando, dubbed as Destiny, because Pugliese was over his head, &quot;he did not know what he was doing,&quot; citing the purchase of &quot;useless swamp land.&quot;</p> <p><img align="right" alt="" src="" width="182" height="192" />Pugliese lead counsel Willie Gary argued that DeLuca was a deceitful and conniving businessman who would do anything to get his way. &quot;Anthony Pugliese is entitled to every dime he would have made had DeLuca not breached the contract,&quot; Palm Beach Post reported. It said, &quot;Both sides used bare-knuckle tactics during their last pleas to the jury. One of the slides Hutchison used to drive home his point about Pugliese&#39;s mishandling of the project was titled: Pugliese Lies Again. Another slide, displayed on a screen in front of jurors, was labeled simply: T.I.E.&quot;</p> <p>Hutchinson quipped, it was an acronym for Pugliese&#39;s business tactics. &quot;Theft, incompetence, ego.&quot;</p> <p>Tricia C.K. Hoffler of Edmond, Lindsay &amp; Hoffler, had argued that their client &quot;was entitled to every dime he would have made had Deluca not breached the contract&quot; the two parties had committed to. During the trial, DeLuca attorneys presented a videotape deposition taken prior to DeLuca&#39;s death in September 2015 at age 67, after his battle with a rare form of leukemia. The Subway founder talked about his growing distrust of Pugliese saying he thought he was doing a terrible job on the real estate project in Florida.</p> <p>Palm Beach Post said shortly before DeLuca passed away, Pugliese pleaded no contest to conspiracy to commit an organized scheme to defraud and grand theft for sending roughly $2.9 million in phony invoices to DeLuca to pay. &quot;Pugliese served four months of a six-month jail sentence and repaid DeLuca $1.2 million.&quot; Pugliese&#39;s business manager, Joseph Reamer also pleaded guilty to the same conspiracy charge and was placed on probation.</p> <p>Willie Gary downplayed Pugliese&#39;s criminal conviction, the Post reported, stating, &quot;Standing behind Pugliese with his hands on his client&#39;s shoulders, Gary described him as a good man who cares about people.&quot;</p> <p>Although Willie Gary did not offer jurors a specific dollar amount of what they claim Fred DeLuca owed Pugliese, he told them, &quot;Just do the right thing.&quot; Gary did make it clear that the right thing would be to award Pugliese &quot;an eye-popping amount equal to the billions DeLuca himself once claimed he would make on the sprawling Destiny project,&quot; Palm Beach Post reported.</p> <p>Gary told jurors Pugliese had already paid for his wrongdoing by going to jail and repaying DeLuca $1.2 million. He said, &quot;They got over $1 million for it and they want you to punish him again.&quot;</p> <p>Attorneys for widow Elisabeth DeLuca say the award will be tripled to $8.7 million because the jury also agreed Pugliese committed civil theft. And she may be entitled to another $2.9 million because the jury ruled Pugliese breached the contract &quot;as well as committed other misdeeds that cause the multi-billion-dollar land deal to collapse,&quot; attorney Rick Hutchison explained.</p> <p>The DeLuca family told the SunSentinel that they were pleased with the verdict and very grateful for the jury&#39;s service.</p> <p>Anthony Pugliese&#39;s lawyers vowed to appeal the jury&#39;s decision. His appeal is expected to focus in part on more than a dozen claims that the court prohibited from the trial. He told reporters, &quot;I&#39;m ready for the next fight.&quot;</p> <hr /> <p><strong>Related Articles: </strong></p> <ul> <li><a href="">Jury Denies Delray Developer Pugliese in Trial over Failed Land Deal with Subway Co-Founder</a></li> <li><a href="">Late Subway Founder Triumphs in Suit against Delray Developer</a></li> <li><a href="">Trial Pitting Delray Developre vs. Subway Founder Goes to Jury Friday</a></li> <li><a href="">Late Subway&#39;s Late CEO Fred DeLuca Testifies at Trial via Videotape</a></li> <li><a href="" target="_blank">Millions at Stake as Pugliese Testifies Today</a></li> <li><a href="" target="_blank">Trial Begins over Subway Founder&#39;s and Delray Developer&#39;s Failed Bid</a></li> <li><a href="" target="_blank">Fraud,Breach Accusations Fly as Trial Begins over Ruins of Land Development Deal</a></li> <li><a href="" target="_blank">Subway Founder Fred DeLuca Sued for $5 Billion</a></li> <li><a href="" target="_blank">Subway&#39;s DeLuca Diagnosed with Leukemia</a>&nbsp;&nbsp;</li> </ul> <!-- google_ad_section_end --> Legal judgment & dispute resolution Tue, 21 Feb 2017 21:25:03 +0000 Janet Sparks 15761 at With a Turnaround Needed, DineEquity’s CEO Julia Stewart Resigns <!-- google_ad_section_start --><p>Faced with disappointing results of its fourth quarter and full year for 2016, DineEquity Inc. (NYSE:DIN) announced yesterday the resignation of its chairman and chief executive officer Julia Stewart, effective March 1. Richard Dahl, the lead director on the firm&#39;s board of directors, will take Stewart&#39;s place as interim chief executive officer and chairman.</p> <p>The board has begun a search for a permanent replacement. Upon completion of the chief executive officer search, the DineEquity board of directors intends to separate the chairman and chief executive officer roles.</p> <p>Dahl has served on DineEquity&#39;s board of directors since February 2004. He has more than 35 years of experience in senior management of public and private companies, including positions of chief executive officer, chief operating officer and chief financial officer. The board has appointed Caroline Nahas as its lead director, replacing Mr. Dahl. Douglas Pasquale will succeed Dahl in his previous role as chairman of the audit and finance committee.</p> <p>DineEquity is the parent company of IHOP and Applebee&#39;s Neighborhood Grill &amp; Bar restaurant brands, two concepts in the troubled casual dining sector that is experiencing a downturn in traffic. The Applebee&#39;s restaurants are operated a hundred percent by franchisees, while the IHOP chain is 99 percent franchised. IHOP reported a decline of 2.1 percent in domestic same-restaurant sales for its fourth quarter of 2016 compared to the same period in 2015, while reporting a decline of only 0.1 percent for the entire year.</p> <p>Applebee&#39;s fared much worse. Its domestic same-restaurant sales dropped by 7.2 percent for the fourth quarter, while for 2016 Applebee&#39;s restaurants had a drop of 5 percent.</p> <p>Mark Kalinowski, restaurant analyst for Nomura Securities, commented how results were worse than expected. &quot;Fourth-quarter same-store sales for Applebee&#39;s declined by 7.2%, the worst performance for any of the top 25 largest restaurant chains in the U.S., as measured by domestic systemwide sales,&quot; emailed the restaurant analyst to investors. IHOP&#39;s figures were far from impressive as well. Regarding DineEquity&#39;s turnaround prospects, Kalinowski wrote: &quot;The challenges remain large and likely won&#39;t be fixed easily or quickly, particularly at Applebee&#39;s.&quot;</p> <p>Incoming interim CEO Richard Dahl sounded resolute and determined to hang on to both restaurant brands. &quot;DineEquity&nbsp;will continue to invest in the long-term success and growth of both IHOP and Applebee&#39;s. I will be working very closely with the Applebee&#39;s franchisees to improve performance,&quot; said Dahl. &quot;While a turnaround of Applebee&#39;s will not happen immediately, the results of a comprehensive diagnostic conducted by a world class management consulting firm has enhanced our understanding of what has driven our recent sales trends.&nbsp; More importantly, we have a go forward plan to improve performance, and have worked with the same firm to validate our initiatives and identify additional creative strategies to expeditiously return Applebee&#39;s to growth.&quot;</p> <!-- google_ad_section_end --> Leadership change Fri, 17 Feb 2017 19:37:22 +0000 Don Sniegowski 15756 at AAFD Chairman on Key Protections that Should Be in a Franchise Contract <!-- google_ad_section_start --><div class="photoright">&nbsp; &nbsp;&nbsp;<img alt="AAFD chairman Bob Purvin working on the words of a fairer franchise contract" src="" style="width: 320px; height: 180px;" /> <div class="caption">Purvin leads franchisees &amp; their franchisor to craft a fairer contract</div> </div> <p>Robert Purvin, founder and chairman of the American Association of Franchisees and Dealers (AAFD), spoke at length with this journal. Purvin is busy nowadays preparing the AAFD, a non-profit trade association that represents the rights and interests of franchisees, for a franchisee leadership summit from April 30 to May 3 in Palm Springs, California. The association will celebrate its 25th anniversary.</p> <!--break--><!--break--><p>Besides being an attorney representing franchisees for some 40 years, Purvin is also the author of a book that is essential reading to any would-be franchise buyer or existing franchisee&ndash;The Franchise Fraud: How to Protect Yourself before and after You Invest. He has been a tireless advocate for franchisees and their rights for decades.</p> <p>The AAFD&#39;s raison d&#39;&ecirc;tre is to help franchisees with a brand to collectively improve their franchise contracts by educating them and bring them&nbsp;to the bargaining table. It does so by building strong independent franchisee associations.</p> <p>In this interview&nbsp;Bob Purvin speaks about some of the key protections that a good franchisee contract should have. The AAFD chairman cites crucial&nbsp;areas from its newest negotiated franchise contract&nbsp;with Griswold Health Care franchise owners.</p> <p><strong>SNIEGOWSKI</strong>: Give me an example of what franchisees can accomplish if they collectively negotiate. For example, one of your chapters is the GHCFA, or Griswold Home Care Franchise Association. Can you tell me what specifically Griswold franchisees obtained from their own independent franchisee association to collectively bargain with their franchisor instead of each business individually doing so?</p> <p><strong>PURVIN</strong>: Griswold has a unique way of operating a home care business that has made them very competitive in a very crowded industry.</p> <p>Griswold is a business that interviews and recommends independent contract caregivers to their clients. It manages the caregiver representation&nbsp;without being the employer of the caregivers. That distinguishes it from most of its competitors. If you go to a Bright Star franchise, all the caregivers that they send out are employees of the franchisee.</p> <p>The home care sector has probably more than a dozen franchisors&mdash;such as Comfort Keepers, Visiting Angels, and Bright Star. The AAFD has four chapters with four home care brands alone. Griswold and Bright Star are two of them.</p> <p>Griswold introduces people to caregivers who are not just independent, but who also manage the care process the way Griswold tells them to. Griswold interviews the franchisees. They make recommendations to customers. The customer pays the [franchisee] caregiver directly and pays a separate fee to [franchisor] Griswold in order to manage that relationship. As a consequence of this arrangement, Griswold does not incur the costs associated with an employer. They have been able to undercut the competition in a way that the Department of Labor was not happy with because the government was not only unable to collect taxes from those in the past who would be employees, but also there was the concern that the [franchisee] caregivers were not being properly compensated [in employment wages and benefits].</p> <p>A lot of the pressure over the last few years has been over minimum wage and wage and hour laws as it applies to [franchisee] caregivers, who were putting pressure on Griswold to hunker down and become like everyone else. But all of Griswold&#39;s franchise agreements had set up an independent contractor relationship. The company wanted to offer what they called a full employment model. Griswold tried to mandate some changes that did not go over well with franchisees. In that process a group of franchisees came to AAFD, formed a Griswold chapter of the association, and did everything according to our rule&nbsp;book and our recommended strategy. Franchisees simply wanted to be respected by the franchisor. They did not want their franchisor to think that they were coming to kill the brand. They weren&#39;t.</p> <p>Over a process that took years, Griswold franchisees changed their franchisor. It was not done overnight. In the end, it was changed through new management who realized that the company needed to listen to its franchisees and be more collaborative. We got to the place where franchisees realized, &quot;We have the wherewithal to stand up for our rights.&quot; This association has grown to represent about 80 percent&nbsp;of franchisees under the Griswold system. For the first three or four years, the chapter only represented about 30 percent of the owners. About 80 percent of the members are supporting the legal fund, which has now raised about a quarter of a million dollars. The company finally understood that this group of franchisees had the wherewithal to stand up for themselves. But the franchisor never, until recently, was willing to engage the association, even though they had to acknowledge them because of the Federal Trade Commission&#39;s rule that requires the franchisor to disclose the existence of a franchisee association in its Franchise Disclosure Document.</p> <p><strong>SNIEGOWSKI</strong>: Right. I heard with my own ears the FTC&#39;s franchise regulator specifically say that rule, where a franchisor has to disclose a franchisee association in its Franchise Disclosure Document, came from the AAFD&#39;s efforts. That change in federal law was a vision of yours from long ago.</p> <div class="photoright"><img alt="AAFD chairman and founder Bob Purvin" src="" style="float: right; height: 320px; width: 320px; margin-left: 5px; margin-right: 5px;" width="320" height="320" /> <div class="caption">Robert Purvin</div> </div> <p><strong>PURVIN</strong>: Correct. One of the things I am very proud of is that AAFD is the only organization that is actually named in the FTC&#39;s Franchise Rule. There is a footnote that mentions that AAFD&#39;s chapters qualify as independent associations.</p> <p>What happened in Griswold&#39;s case was that the franchisor showed that it was not going to recognize the association, but it would sit down and have a dialog with individual association members over the changes in its business model and the rewriting of its franchise agreement. It was a franchise agreement committee, to which franchisees could elect their representatives. All of the representatives that were elected were also leaders within the independent franchisee association. Everybody knew it. In that way&nbsp;the company took the first baby steps and unofficially recognized the association.</p> <p><strong>SNIEGOWSKI</strong>: Isn&#39;t it typical for franchisors to at first not want to recognize the existence of independent associations that represent franchise owners?</p> <p><strong>PURVIN</strong>: Yes. It is very common that a franchisor will start out by not recognizing an independent franchisee association. But I would remind franchisees that they need to earn the right of recognition, which the Griswold association did.</p> <p>By the end of the negotiation there was a specific recognition of Griswold Home Care Franchise Association that was written into the franchisees&#39;&nbsp;new agreement that we are so proud of. So franchisees went into the negotiation rounds without recognition of their association by the franchisor, but came out of the negotiations with full recognition.</p> <p>Right now the relationship has been strengthened and both franchisees and franchisor are happy to be in business with each other. That is always the goal. That follows our philosophy of what the AAFD calls Total Quality Franchising. It is a franchise culture in which legitimate business needs of both the franchisor and franchisee are being met in a collaborative process that serves the brand.</p> <p>I told Griswold franchisees that they need to go to the franchising company and ask about a common mission. That common mission would be something that both sides cherished &ndash; the success of the Griswold brand for their mutual benefit. And then they needed to agree to guiding principles that help to get to the common mission. I provided them with some language, which was embraced by all parties. The common mission is to the brand. The guiding principles are that the franchisees agree that Griswold gets to define what the system looks like with input from the franchisee association. Griswold agrees that they will respect the franchisees ongoing concerns about the value of their individual franchises. That means that the franchisor has a duty under the contract to support franchisees&#39; profits. That is an affirmative duty. It is no longer an implied duty of good faith and fair dealing.</p> <p>The law presumes and implies under every contract there is a duty of good faith. The idea behind the implied duty of good faith is that when people enter a contract they have the right that the other party is not going to inhibit their success. It is implied that both are going to work hard to make it work. But that implied duty cannot create rights. It can only protect the rights written into the agreement. An affirmative duty of good faith says that I am bound to seek your success. That is what we have written into the Griswold franchise contract. Previously&nbsp;the AAFD was also able to insert that into our Homes &amp; Land agreement [another franchise chapter]. We have similar things, although not quite as abundant, in other agreements that AAFD has helped negotiate for franchisee associations.</p> <p><strong>SNIEGOWSKI</strong>: That reminds me of an ex-franchisee of an ice cream chain from years ago. He advocated all franchisees leave the brand. But if there are no franchisees, there is no franchise brand. That, in essence, is burning down the house. It is abandoning the brand and the chain. It leaves no common ground with the franchisor for negotiation if their opponent wants to destroy them and all they have built. Your point of view is different than that ex-franchisee. You say the franchisor needs to be reminded that it and its employees are not alone in wanting to preserve and build the brand. The long-term success of the brand builds value in the franchisees&#39; own holdings.</p> <p><strong>PURVIN</strong>: I understand your viewpoint on that ex-franchisee. However, the AAFD has had systems that deserved to be blown up. Systems that&nbsp;have been fraudulent schemes in which the franchise system was built like a Ponzi scheme that we helped expose. It needed to be gone. In those circumstances, franchisees have also come to the AAFD and collectively just wanted out, even though they recognized that they likely would not make it on their own.</p> <p>In other circumstances, we can set up franchisees to run the franchise chain. The AAFD actually operates a franchise chain called Kiva Juice. The franchisees had come to AAFD and we discovered that it was a totally fraudulent package. The franchisor sold 60 franchises. Rather than go to jail, he ended up assigning the franchising firm to the independent franchisee association, which is a chapter of the AAFD. All of the intellectual property rights&mdash;all of the franchise agreements, the trademarks and trade names &ndash; were assigned to the association. That chapter of the AAFD now runs that enterprise. It is a group of franchise owners who came to us, where their issue was to get out from under the man that was bilking them.</p> <p>But that is not the norm. The typical situation is with franchisees that love the brand and have made a huge investment in it. Our job is to convince the franchisor that we do not have a death wish. If we work together collaboratively, we will accomplish a whole lot more together then if we are always battling each other.&nbsp;The really great franchise systems have done just that. That is what we are always hopeful of achieving.</p> <p>With Griswold we accomplished a right of ownership. We obtained an affirmative duty of good faith [from the franchisor]. Griswold recognized the owners&nbsp;association as a representative body through which collaboration occurs with franchisees. In most franchise agreements&nbsp;the franchisor carves out something called sole discretion. A big area of franchise law right now is when does a franchisor have sole discretion. In the Griswold agreement&nbsp;there is reasonable discretion and there is sole discretion. In every instance except for one item, the company agrees that even when they exercise sole discretion they must do so with consultation, which is defined in the agreement as sitting down with the franchise association delegate and discussing it. The franchisor does not give up its right to select a buyer of a franchisee&#39;s license, but it does give up its right to select without having consultation and agreement.</p> <p>The other big thing to come out of this is that Griswold restored a recognition of ownership. The whole franchise industry has evolved to a point, thanks to our friends at McDonald&#39;s, in which many do not recognize that a franchisee owns their business and has equity in its business. To some franchisor advocates, franchisees are just operators and equity renters. For example, McDonald&#39;s calls their franchisees operators, which is why McDonald&#39;s has gotten itself into this joint employer problem because the franchisor has evolved in a way in which they control and own the franchise.</p> <p>We could spend a whole new session just on this one topic of the pickle that franchisors have gotten themselves into in now being considered as <a href="">a joint employer with the franchisee</a>. That topic may go away with the new administration [President Trump&#39;s] and the new Secretary of Labor Andy Puzder [CKE Restaurants CEO, who withdrew his nomination after this interview. Yesterday the President nominated Alexander Acosta, who has served in the National Labor Relations Board].</p> <p>We have recorded in the Griswold franchise agreement a recognition that a franchisee owns its business. What comes with that are protections of equity &ndash; the right to stay in business, the right to renew the franchise. In the Griswold agreement, if the franchise is in compliance [with the franchise agreement and operating standards], it has the right to renew the contract. That protection is not typical in most franchise contracts.</p> <p>There is not an aspect of this agreement in which we did not achieve collaboration. I&#39;ll give you an example: Most franchise agreements that you see have a statement&nbsp;that the franchisee agrees that the franchisee will protect the confidentiality of whatever the franchisor has communicated with them. That gag includes stuff that the franchisee may have developed itself. It is the franchisee that promises to maintain confidentiality, but in contrast the franchisor makes no such promise. For the franchisor, what is yours is mine, and what is mine is mine. The Griswold agreement turns that on its head. The parties mutually agree to maintain the confidentiality of the information.</p> <p>The franchisees are also recognized to have some goodwill in their businesses, which is almost unheard of.&nbsp; When franchisees sell their franchise, they are entitled to recover the goodwill of their business.</p> <p>By the way, it was not a sellout by the franchisor. The franchisor renewed the loyalty of its franchise owners and strengthened a dedication to make the brand better. The franchise agreement should not be an agreement that the franchisee is sorry to sign. It is an agreement which all parties should feel vested in. Both parties take ownership of that contract.&nbsp;It makes for a happier brand because people are proud of what they are accomplishing together.</p> <p><em>This article is Part 2 of a series. More to come.</em></p> <hr /> <p>Read Part 1 of the interview with AAFD&#39;s chairman: <a href="" target="_blank">Why independent franchisee associations are critical to franchise owners</a></p> <!-- google_ad_section_end --> Franchisee rights AAFD American Association of Franchisees and Dealers cure period franchise association recognition franchise equity franchise termination franchisor's affirmative duty of good faith gag clause Griswold Home Care Franchise Association independent franchisee association joint employer renewal right Fri, 17 Feb 2017 12:40:18 +0000 Don Sniegowski 15751 at Andy Puzder Withdraws Nomination as Secretary of Labor <!-- google_ad_section_start --><div class="photoright"><img alt="Andrew Puzder" src="/sites/default/files/resize/1174px-Andrew_Puzder_by_Gage_Skidmore_1-320x180.jpg" style="width: 320px; height: 180px;" width="320" height="180" /> <div class="caption">Andy Puzder. ( <a href="">Photo</a> by Gage Skidmore, <a href="" title="Creative Commons Attribution-Share Alike 3.0">CC BY-SA 3.0</a>)</div> </div> <p>Andy Puzder withdrew as a nominee today for Secretary of Department of Labor in President Trump&#39;s administration.</p> <!--break--><!--break--><p>&quot;I am withdrawing my nomination for Secretary of Labor,&quot; tweeted Puzder today shortly after 1 p.m. EST.</p> <p>Originally a commercial trial lawyer, Puzder is the chief executive officer of CKE Restaurants&nbsp;Inc., the holding company of burger franchisors Carl&#39;s Jr. and Hardee&#39;s.</p> <p>The International Franchise Association, who came out in strong support of Puzder, was disappointed. &quot;Andy Puzder always saw the bigger picture, so his decision to withdraw is just another example of his character as someone willing to put himself aside on behalf of the greater good,&quot; said CEO and president of the IFA, Robert Cresanti. &quot;From his humble beginnings, Andy worked to make a difference and that&#39;s precisely why he would&#39;ve been a great addition to President Trump&#39;s Administration.&quot;</p> <p>The Hill, a news site that covers politics and policy on Capitol Hill, <a href="">reported</a> that Puzder was under intense pressure &quot;for admitting he hired an illegal immigrant as a housekeeper and past allegations that he abused his ex-wife and treated employees poorly.&quot; It elaborated that the Oprah Winfrey Network had provided a copy of a 1990 episode of the Oprah show that had been circulated among Congress members. The Hill reported, &quot;Puzder&#39;s ex-wife, Lisa Fierstein, reportedly appeared in disguise to speak out as a domestic violence victim. She discussed allegations of physical abuse against her former husband on the show. Fierstein has since retracted her allegations, including in a recent letter to the Senate Health, Education, Labor and Pensions Committee, Politico&nbsp;<a href="" target="_blank">reported</a>.&quot;</p> <div class="photoright"> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en">I am withdrawing my nomination for Secretary of Labor. I&#39;m honored to have been considered and am grateful to all who have supported me.</p> <p>&mdash; Andy Puzder (@AndyPuzder) <a href="">February 15, 2017</a></p></blockquote> <script async src="//" charset="utf-8"></script></div> <p>The IFA&#39;s Cresanti stated that he thinks Puzder&#39;s approach to managing the Labor Department would have reversed job-killing regulations implemented by the Obama administration. &quot;Regardless of where he is, Andy will continue his dedicated pursuit towards advancing growth for&nbsp;all workers as the leader of one of America&#39;s great franchises and everything this business model represents,&quot; said Cresanti.</p> <p>Bob Purvin, chairman of the American Association of Franchisees and Dealers had a different take from&nbsp;the IFA about the withdrawal of Puzder as the Secretary of Labor nominee. His views were mixed. &quot;There are many issues, particularly in relation to pay and labor, in which Puzder has been a friend of franchisee owners. But on other issues Puzder has not been a friend,&quot; stated the leader of the 25-year-old national franchisee organization. Puzder has argued against laws that increased minimum wage and changed overtime regulation, with many franchise owners agreeing with him. However, Purvin points out that nominee Andy Puzder would likely come down strongly against an ongoing joint-employer ruling that would allow franchisors to have control of franchise owners&#39; businesses&nbsp;while ensuring little to no franchisor liability on what a franchisor instructs franchise owners to do with their businesses. &quot;It is here that franchisees felt trepidation,&quot; Purvin concluded.</p> <!-- google_ad_section_end --> Politics Wed, 15 Feb 2017 23:51:15 +0000 Don Sniegowski 15749 at Multiunit Franchisee Atour Eyvazian Named Restaurant Association’s 2017 Convention Chairman <!-- google_ad_section_start --><p><img alt="Jack int the Box multiunit franchise owner Atour Eyvazian" src="" style="float: right; height: 321px; width: 320px; margin-left: 6px; margin-right: 6px;" width="320" height="321" />The National Restaurant Association announced on Tuesday that it has appointed franchisee Atour Eyvazian as its Restaurant Hotel-Motel Show convention chairman for 2017. Eyvazian is a multiunit owner of 107 Jack in the Box restaurants in Houston and San Antonio.</p> <!--break--><!--break--><p>In 1984 Eyvazian fled war-torn Iran and Turkish prison to arrive in Los Angeles. Not speaking any English, the new immigrant started his first American job &ndash; a janitor at Jack in the Box. After he learned English, he became a Jack in the Box restaurant manager. Taking advantage of a tuition reimbursement program that the Jack in the Box company offered its employees, he earned a baccalaureate degree and then a master of business administration.</p> <p>In 2005, he bought 10 Jack in the Box restaurants in Sacramento, California, and has expanded his restaurant empire over ten-fold.</p> <p>&quot;Eyvazian&#39;s 25-year journey from his arrival to the United States, unable to read or speak in English, to now owning 107 Jack in the Box restaurants is a real life story about the achievement of the American dream and will serve as inspiration and provide insight for our attendees,&quot; said Dawn Sweeney, president and CEO of the National Restaurant Association.</p> <p>The NRA Show 2017 is scheduled from May 20 to 23, 2017 at Chicago&rsquo;s McCormick Place.</p> <!-- google_ad_section_end --> People Wed, 15 Feb 2017 18:15:28 +0000 Don Sniegowski 15748 at Mike Ilitch, Franchisor and Franchisee, Dead at 87 <!-- google_ad_section_start --><p><img alt="Mike Ilitch" src="" style="float: right; height: 320px; width: 320px; margin-left: 5px; margin-right: 5px;" width="320" height="320" />The co-founder (with wife Marian)&nbsp;of franchisor Little Caesars Pizza and owner of Major League Baseball&#39;s Detroit Tigers and Hockey&#39;s Red Wings franchise, Mike Ilitch, died in a Detroit hospital on Friday. He was 87.</p> <!--break--><!--break--><p>During his life, Ilitch received many honors. He was inducted into the U.S. Hockey Hall of Fame, the National Hockey League Hall of Fame, the Michigan Sports Hall of Fame, the International Franchise Association&#39;s Hall of Fame, to name a few of his honors. He was behind numerous philanthropic endeavors.</p> <p>In May of 1959, Ilitch started a Little Caesars Pizza shop in a suburb of Detroit, Garden City. It sold its first franchise license in 1962. As of its disclosures at the beginning of 2016, it has grown in the United States to some 3,900 franchises and 500 company outlets. It franchises internationally as well.</p> <p>Competitor Domino&#39;s Pizza released this statement of Ilitch&#39;s passing: &quot;We are saddened tonight by the loss of Mike Ilitch,&quot; said Patrick Doyle, CEO of Domino&#39;s Pizza. &quot;He was not only an icon in the restaurant industry and a philanthropist who had a profound impact on the city of Detroit, he was also a worthy adversary.&quot; Domino&#39;s was founded only a year later than Little Caesars in nearby Ypsilanti. It also has become one of the world&#39;s largest pizza chains. &quot;We loved competing against him and his world-renowned brand. We send our deepest condolences to the Ilitch family,&quot; said Doyle.</p> <p>Mike Ilitch&nbsp;was married to&nbsp;Marian Ilitch, his wife and business partner for 61 years. They have seven children.</p> <p>Upon graduating from high school in 1947, the Detroit Tigers offered Ilitch a minor league contract. Ilitch turned the opportunity down to join the U.S. Marine Corps, serving from 1948-1952. After discharge from the Marines, Ilitch played shortstop in the minor league franchise system from 1952 to 1955, making it to AAA and hitting over .300, until a knee injury ended his baseball career. He later worked as a door-to-door salesman until he and his wife Marian saved enough money to open the first Little Caesars in Garden City, Michigan on May 8, 1959.</p> <p>Success in the pizza business enabled Ilitch to invest in other food, sports and entertainment businesses. All businesses are headquartered in the Detroit metropolitan area and will continue under family ownership, led by president and CEO of Ilitch Holdings, Inc., Christopher Ilitch.</p> <p>&quot;My father was a once-in-a-generation entrepreneur, visionary and leader, setting the tone for our organization and our family,&quot; said&nbsp;Christopher Ilitch, president and CEO of Ilitch Holdings Inc. &quot;He made such a positive impact in the world of sports, in business and in the community, and we will remember him for his unwavering commitment to his employees, his passion for&nbsp;Detroit, his generosity to others and his devotion to his family and friends. Together my family and the company celebrate the tremendous man he was, and we will continue to work hard to uphold his remarkable legacy. I&#39;m honored to have had the opportunity to work with him to nurture and grow our businesses, but mostly, I&#39;m grateful to have called him my Dad.&quot;</p> <p>The family will honor Mr. Ilitch at a private funeral service. An opportunity for members of the public to pay their respects is also being planned and will later be announced.</p> <hr /> <p><strong>UPDATE</strong> (Feb 12, 2017): A public visitation will be at the Fox Theatre Grand Lobby. Mr. Ilitch will lie in repose for a public visitation on Wednesday, February 15, from noon &ndash; 8 p.m. in the Grand Lobby of the historic Fox Theatre. Community members are invited to the lobby of this national historic site that Mike and his wife Marian fully restored and established as the world headquarters of Little Caesars in 1989.</p> <p>Beginning February 13 at 1 p.m., a public memorial display will be set up at Commercial Park. Community members are invited to share memories or write messages of condolence on a temporary, public memorial site to be organized outside of Comercial Park, near the &quot;Big Tiger&quot;.&nbsp; Memorial sentiments will be saved and shared with family.</p> <!-- google_ad_section_end --> Leadership change Sun, 12 Feb 2017 15:23:55 +0000 Don Sniegowski 15744 at