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Log In / Register | May 26, 2013

Expert Advice

Franchise Review Report Released: Good Faith and Penalties Recommended

Australia | simon young | May 17 | franchising, legal
The Report by Mr Alan Wein (from his Review of the Australian Franchising Code of Conduct conducted earlier this year) has been released today and makes 18 recommendations for improving the franchise sector. A copy of the report can be accessed through the Department of Innovation website. The Report’s recommendations can be summarised as follows (with significant changes emphasised in bold): Where a franchisor is willing to offer a further term a Disclosure Document (which presumably would include a copy of the proposed franchise agreement) must be sent with a Notice under clause 20A; Streamlining the Disclosure requirements for Master or overseas based franchisors by reducing the scope of disclosure of the master franchise arrangements; Including specific disclosure...
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A Legacy for My Grandchildren

Member | Jay Ricker | May 10 | legal
One of the main reasons why we all work hard is to leave something behind for our kids and grandkids. The choices we make today have consequences we can’t even imagine in the future. That’s why I’m fighting against the unfair credit card swipe fee settlement the credit card companies are pushing in response to a class action lawsuit filed by merchants like myself. If I accept the settlement to the federal lawsuit, it means the next generations of owners of Ricker’s won’t have as many legal rights as I have to combat bad behavior by Visa or MasterCard. They will just have to live with higher and higher fees every time a card is used in their store. I can’t do that to them. I own 50 gas and convenience stores in Indiana; we’re one of the largest...
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Franchise Succession Planning

Expert | W Michael Garner | May 10 | legal
What happens to a franchise if a franchisee passes away? Can the franchise be transferred to a qualified successor? Or will the business automatically be terminated? Frequently, franchise agreements answer these questions. Most agreements allow the franchisee's heirs to operate for a given period of time—say four months—and then the franchise must be sold to a qualified buyer, who may be one of the heirs. But many agreements do not permit this flexibility, in which case it's important to look to whether state statutes address the question. A number of states have covered this issue. Franchise succession in California After the death of a franchisee in California, a surviving spouse, heir, estate, or majority shareholder may own the franchise for a reasonable period of...
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Coalition of Franchisee Associations Supports Maine's Small Business Investment Protection Act

Member | Kristi Keith | May 8 | legal
The Coalition of Franchisee Associations (CFA) applauds the introduction of Maine's Small Business Investment Protection Act (LD 1458) and urges the Joint Standing Committee on Labor, Commerce, Research and Economic Development to pass the legislation in its current form. “The CFA commends House Rep. Erin Herbig for introducing such an important piece of legislation and encourages the Maine legislature to support its passage,” said Misty Chally, CFA Executive Director. “It’s crucial that the issues currently present in franchise agreements be brought to light, and Maine’s job creators are granted the rights they need and deserve to effectively run their businesses.” Across the country, millions of small business owners embrace the entrepreneurial...
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The Ethics of Franchise Law

Canada | Jennifer Dolman | May 5 | legal
At the April 3 dinner meeting of the Ontario Bar Association Franchise Law Section, the topic of ethical issues for franchise lawyers was addressed. This was Round 2 of a thought-provoking program first presented in February, 2011. On both occasions, the panel included experienced franchise lawyers, as well as Caterina Galati, a representative from the Law Society of Upper Canada. Her task was to guide the panelists and attendees on the application of the Law Society’s rules of professional conduct, which govern all lawyers licensed to practice law in Ontario, to various fact scenarios arising from time to time in the franchise law area. I can’t address all of the hypotheticals discussed in the two dinner programs but I will cover a few that directly impact my franchise...
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Plain Language is Important

Member | Ryan Holmes | May 2 | legal
In H&R Block Tax Services v. Franklin, (pdf) the Court of Appeals concluded (over a strong dissent) that H&R Block had the right to terminate two franchise agreements where those agreements expressly stated that Franklin could terminate at any time but only allowed H&R Block to terminate for cause. The language of the franchise agreements at issue was as follows: "The initial terms of this Agreement shall begin on the date hereof and, unless sooner terminated by Block [for cause] as provided in paragraph 6, shall end five years after such date, and shall automatically renew itself for successive five-year terms thereafter (the “renewal terms”); provided, that Franchisee may terminate this Agreement effective at the end of the initial term or any renewal term...
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Australia Inquires into Regulating Franchising

Australia | simon young | Apr 24 | legal
This article provides some preliminary assessment of the submissions to the 2013 review of the regulation of the franchising sector in Australia. This review was scheduled after the last series of amendments were made to the Franchising Code of Conduct in 2010. Headed by Australia's Alan Wein, it will also be known as the Wein Review. The 2010 amendments to the Franchising Code of Conduct were based upon a series of recommendations made by a Senate Committee Inquiry and then further refined by an invitational Expert Panel. The final form changes bore only passing resemblance to the significant reforms suggested by the Senate Committee. In particular the change made in the area of "good faith" has been condemned as 'window dressing' with the apparent purpose of...
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California Senate Committee Passes SB 610 Fair Franchise Act

Expert | Ali Mazarei | Apr 17 | legal
Good NEWS from California Senate...SB 610 Fair Franchisee Bill passed via a 5 to 2 vote yesterday at Senate Judiciary Committee! It is now headed to the Senate floor for full Senate vote, then back to the Assembly, then hopefully to Jerry Brown this fall for signature. All of the Democrats supported the bill, the two GOP members voted no. The bill's author, Senator Hanna Beth Jackson spoke and advocated for us extremely well...all of our franchisee, including Ali Mazarei, Keith Miller, Amin Salkhi, Quizino's franchisees, McDonalds franchisees, political consultant and attorney expert testifiers did great, spoke very well as well. The IFA response (only one speaker) was muted at best. They felt they were going to lose today and they did.  We are very grateful for our...
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Marijuana Franchises May Become Safer

Expert | W Michael Garner | Apr 15 | legal
By Elliot Ginsburg On April 12, 2013, a bipartisan group of U.S. Representatives introduced a proposed amendment to the Controlled Substances Act. The bill would offer immunity from federal prosecution to individuals and businesses—including marijuana dispensaries—that comply with state marijuana laws. The bipartisan group of representatives includes three Democratic and three Republican co-sponsors from California, Michigan, Alaska, Oregon, Tennessee, and Colorado. New opportunities for marijuana franchises Under current federal law, operating a marijuana dispensary is inherently illegal. By reducing the risks involved with running an unlawful business, the proposed bill could create substantial opportunities to sell marijuana franchises. However, even if federal law were to...
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Submissions to Latest Australian Inquiry Now Available

Australia | simon young | Apr 15 | franchising, legal
73 submissions that have been made to the Wein inquiry from a wide range of the franchise spectrum, including individuals, corporations, lawyers and academics, are now available on-line through the followng link:  http://www.innovation.gov.au/SmallBusiness/CodesOfConduct/Pages/Submissions-made-to-the-2013-review-of-the-Franchising-Code-of-Conduct.aspx It is unclear when the final report will be handed down and it is believed that discussions about potential recommendations remain ongoing. Of the issues addressed by the inquiry by far the most controversial is the possible introduction of good faith as a statutory obligation in franchising relationships, although the definition and parameters that might apply are no clearer now than before the inquiry began....
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