Franchise disclosure obligations and registration can carry significant costs of compliance and can be an administrative burden. Initially drafting a compliant Franchise Disclosure Document (“FDD”) is a time-intensive process. Then the franchisor must update the FDD annually for as long as it wishes to sell franchises. State registration of the franchisor and review of the FDD can further delay franchise sales. Additionally, an FDD contains confidential information that the franchisor may not wish to make public, especially if the business is a particularly sensitive to competition. Franchise laws restrict otherwise legal sales practices, such as making financial performance representations outside of Item 19, which can be another frustration for franchisors.

Exemptions to the franchise disclosure and registration laws provide both seasoned and start up franchisors the opportunity to reduce these burdens and costs by either (1) avoiding registration in a state or (2) avoiding drafting an FDD at all. Continue Reading FTC Franchise Exemptions: Leased Departments, Petroleum Sellers, and Oral Contracts

Franchise disclosure obligations and registration can carry significant costs of compliance and can be an administrative burden. Initially drafting a compliant Franchise Disclosure Document (“FDD”) is a time-intensive process. Then the franchisor must update the FDD annually for as long as it wishes to sell franchises. State registration of the franchisor and review of the FDD can further delay franchise sales. Additionally, an FDD contains confidential information that the franchisor may not wish to make public, especially if the business is a particularly sensitive to competition. Franchise laws restrict otherwise legal sales practices, such as making financial performance representations outside of Item 19, which can be another frustration for franchisors.

Exemptions to the franchise disclosure and registration laws provide both seasoned and start up franchisors the opportunity to reduce these burdens and costs by either (1) avoiding registration in a state or (2) avoiding drafting an FDD at all. Continue Reading FTC Franchise Exemptions: Fractional Franchises

Franchise disclosure obligations and registration can carry significant costs of compliance and can be an administrative burden. Initially drafting a compliant Franchise Disclosure Document (“FDD”) is a time-intensive process. Then the franchisor must update the FDD annually for as long as it wishes to sell franchises. State registration of the franchisor and review of the FDD can further delay franchise sales. Additionally, an FDD contains confidential information that the franchisor may not wish to make public, especially if the business is a particularly sensitive to competition. Franchise laws restrict otherwise legal sales practices, such as making financial performance representations outside of Item 19, which can be another frustration for franchisors.

Exemptions to the franchise disclosure and registration laws provide both seasoned and start up franchisors the opportunity to reduce these burdens and costs by either (1) avoiding registration in a state or (2) avoiding drafting an FDD at all. Continue Reading FTC Franchise Exemptions: Large Investment Exemption

Franchise disclosure obligations and registration can carry significant costs of compliance and can be an administrative burden. Initially drafting a compliant Franchise Disclosure Document (“FDD”) is a time-intensive process. Then the franchisor must update the FDD annually for as long as it wishes to sell franchises. State registration of the franchisor and review of the FDD can further delay franchise sales.

Continue Reading FTC Franchise Exemptions: Insiders Exemption

Franchise disclosure obligations and registration can carry significant costs of compliance and can be an administrative burden. Initially drafting a compliant Franchise Disclosure Document (“FDD”) is a time-intensive process. Then the franchisor must update the FDD annually for as long as it wishes to sell franchises. State registration of the franchisor and review of the FDD can further delay franchise sales. Additionally, an FDD contains confidential information that the franchisor may not wish to make public, especially if the business is particularly sensitive to competition. Franchise laws restrict otherwise legal sales practices, such as making financial performance representations outside of Item 19, which can be another frustration for franchisors.

Exemptions to the franchise disclosure and registration laws provide both seasoned and start up franchisors the opportunity to reduce these burdens and costs by either (1) avoiding registration in a state or (2) avoiding drafting an FDD at all.

In this blog post series, we summarize the exemptions available under the Federal Trade Commission Franchise Rule (“Rule”), which allow a franchisor to sell a franchise without an FDD. Any analysis of what exemptions apply to your brand is incomplete if you do not also consider the application of state law. States may not recognize the federal exemptions and may offer different exemptions to their registration requirements.

Continue Reading FTC Franchise Exemptions: Minimum Payment Exemption

Franchise disclosure obligations and registration can carry significant costs of compliance and can be an administrative burden. Initially drafting a compliant Franchise Disclosure Document (“FDD”) is a time-intensive process. Then the franchisor must update the FDD annually for as long as it wishes to sell franchises. State registration of the franchisor and review of the FDD can further delay franchise sales. Additionally, an FDD contains confidential information that the franchisor may not wish to make public, especially if the business is a particularly sensitive to competition. Franchise laws restrict otherwise legal sales practices, such as making financial performance representations outside of Item 19, which can be another frustration for franchisors.

Exemptions to the franchise disclosure and registration laws provide both seasoned and start up franchisors the opportunity to reduce these burdens and costs by either (1) avoiding registration in a state or (2) avoiding drafting an FDD at all.

In this blog post series, we summarize the exemptions available under the Federal Trade Commission Franchise Rule (“Rule”), which allow a franchisor to sell a franchise without an FDD. Any analysis of what exemptions apply to your brand is incomplete if you do not also consider the application of state law. States may not recognize the federal exemptions and may offer different exemptions to their registration requirements.

Continue Reading FTC Franchise Exemptions: Large Franchisee Exemption

 

In 2020, most franchises experienced unprecedented disruptions in both franchise operations and development.  Franchisors should consider how to use their FDD update process to position their brand for success with both prospective and existing franchisees.  In this webinar, leading franchise attorney Ritchie Taylor shares actionable strategies to maximize success as we enter the new post-COVID franchise business cycle.  The program includes a discussion of how to address Item 19 financial performance representations during the renewal process as well as an update on how recent changes to financial accounting standards could improve the revenue recognition for private franchisors.

Despite the challenges of COVID-19 for many franchise systems, franchisors can still be successful in supporting their current franchisees and recruiting new franchisees. In this webinar, Steve Beagelman, President & CEO of SMB Franchise Advisors, discusses the best practices for improved franchise development during the COVID-19 “new normal.”

Franchisors must begin by ensuring that franchisees are receiving enough support because development relies on strong franchise owner validation. Franchisors need to lead in protecting the brand and maintaining bottom line profitability. They can do this by (1) making sure that franchise owners, customers, and employees feel safe, (2) helping franchisees leverage programs (like the PPP program) and relationships (such as with landlords and vendors) to maintain profits, (3) communicate clearly and frequently.

If COVID-19 has had a sustained impact on your business, your franchise system may benefit from short-term reductions in fees that franchisees pay. Another consideration for incoming franchisees is adapting the start-up obligations and development timeline to reflect supply chain disruptions and operational restrictions.

Creating engagement with the brand benefits both current and prospective franchisees. For example, videos featuring franchise owners, customers, and members of the franchisor team are powerful ways to show brand culture. Videos are particularly useful because they can be adapted for multiple platforms.

Finally, franchisors should reevaluate their marketing and sales efforts and try new tactics. Perhaps your ideal franchise candidate has changed with the pandemic and you need to reach him or her in new ways. Maybe there is an opportunity to maximize social media marketing because people are spending more time online. In the webinar, Steve also presents the front-line perspective regarding franchise sales from franchisors who use third party brokers and sales groups.

The critical message of Steve’s presentation is that franchisors should not stop the process of franchise development and should instead adjust their efforts and expectations to reflect both the opportunities and challenges that pandemic has introduced.

Data privacy is a rapidly developing area of law that can create significant compliance obligations for small, medium, and large companies.  Data privacy, or the right of individuals to control their personal information, is addressed by a patchwork of state and federal laws. Knowing which laws affect your business can be challenging, especially if you are not in a highly regulated industry like health care or financial services.

CarlieThe key to general compliance with many data privacy laws is to understand what your business is doing to “process” personal information. Processing includes collecting, using, storing, disclosing, and deleting. Your business must describe its processing activities in a privacy policy.

State and federal laws give the individuals whose personal information your business processes certain rights or declares certain prohibitions on your use of their information – all of which can affect your business operations. For example, the California Consumer Privacy Act requires you to respond to your customer’s requests to know what information you have about them and be able to delete or cease sharing it with other entities. The federal Telephone Consumer Protection Act prohibits you from contacting your customers using certain technologies without their consent.

Another component of data privacy law is implementing adequate data security measures. Data breaches affect major brands as well as small businesses. Understanding data security can help you both prevent problems and respond to incidents.

Complying with data privacy laws is a matter of urgency. Data privacy laws carry the risk of fines, government enforcement actions, or private suits. Additionally, the reputational costs of data breaches or misuse of personal information are significant. On the other hand, data privacy compliance will help you earn and keep your customer’s trust and help you innovate.

In this Flash Briefings by Manning Fulton webinar, Charles (‘Chuck’) H. Munn, Jr. and Carlie A. Smith discuss answers to the following questions about data privacy.

  • What is data privacy?
  • What is personal information?
  • How do I know what federal or state laws apply to my business?
  • What are the benefits of a data privacy compliance program and what are the risks of delaying compliance?
  • How do I get started with data privacy compliance?
  • How does data privacy affect my relationship with vendors?
  • What should I include in a data breach response plan?

If you have additional questions about data privacy, please reach out to Manning Fulton attorneys who can provide advice tailored to your business needs.

One central benefit that franchisees seek from joining a franchise system is the leadership of the franchisor’s team. This team controls the brand standards, leads national marketing, gives advice and support, and is responsible for brand innovation and development.

Item 2 of the Franchise Disclosure Document (“FDD”) discloses to prospective franchisees who these leaders are and their business experience. Item 2 also discloses who is involved in franchise sales and operations. However, under the requirements of the FTC Franchise Rule, not every leader, manager, or salesperson needs to be included. The below lists summarize who needs to be included in Item 2 and who does not.

Continue Reading Who’s Who in Item 2?