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?

The second webinar in the Franchise Feed series, presented by two of our franchise friends, SHERRI SEIBER and GEOFF SEIBER, the COO and CEO, respectively, of FranFund, the leading full service funding solution focused exclusively on the franchise community. Franchise finance is the lifeblood of franchise development. Accordingly, it is important for franchisors and franchisees alike to understand the current financing environment and the tools available to help franchisees fund their franchised businesses.

Most franchisors need to amend their FDDs in 2020 to account for the devastating impacts of COVID-19.  Are you one of them?

In this webinar, presented by Ashley Nielsen and Carlie Smith, both franchise associates at Manning Fulton, you will learn about:

  • “Material changes” and when they warrant an amendment
  • Recent guidance from state regulators about COVID-19 amendments
  • Potential penalties and complications in 2021 resulting from failure to amend in 2020
  • Best practices for updating your financial performance representations and more

Businesses are increasingly defined by the technologies they use internally or that they offer to their customers; franchisors are no exception Technology is interwoven into the way that businesses think about themselves and the world. For example, Amazon famously declared itself first a technology company that “just happens to do retail.” Developments in technology distinguish companies from their competition and open new growth opportunities.

Your franchise business likely depends of an array of systems to interact with customers, provide goods and services, and link franchisees to you and each other. Or, perhaps, those advancements are still aspirations for your system, and you want to leave the door open to introduce those technologies later.

Having the technology fee disclosed in your Franchise Disclosure Document (“FDD”) and included in your Franchise Agreement provides you with the flexibility to implement technologies systemwide and have your franchisees help bear the cost.

Continue Reading What is the Technology Fee and Why Should I Charge My Franchisees One?

Items 5, 6, and 7 of a Franchise Disclosure Document (“FDD”) are all about money – how much the franchisor charges for the goods and services it provides franchisees before the franchised business opens, how much the franchisee will pay to the franchisor throughout the business relationship, and how much the franchisee will need to invest to open the business. After reading Items 5, 6, 7, the franchisee must understand how much things cost, how much they’ll be paying you, and when they will be making payments.

It is important for you to give accurate estimates to avoid litigation risks and help prospective franchisees evaluate their ability to successfully finance and open the business. Continue Reading Franchise Disclosure Document (“FDD”) Items 5, 6, and 7 Explained

Your trademark is a critical asset in your franchise system. You work hard to cultivate the brand associated with the trademark and you carefully monitor how your franchisees and competitors use your trademarks. Registering your trademark with the U.S. Patent and Trademark Office gives you additional legal protections for this valuable intellectual property.

Continue Reading Trademark Registration 101

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How to Avoid Litigation in Franchising

There is a host of issues that can arise in a relationship between a franchisor and a franchisee. If not properly addressed, some of these issues can mushroom into legal sparring or even full-blown litigation.

Common issues include the enforcing of system standards, franchisees performing below their and/or the franchisor’s expectations, adapting to changes in the marketplace, diverging values and principles, or compliance with federal and state laws that regulate the franchise relationship.

No matter what the particular catalyst, there are several critical steps a franchisor can take to help assuage – or even avoid – legal issues. Continue Reading How to Avoid Litigation in Franchising

Developing a Social Media Policy for Franchise Systems

Effective use of social media is challenging for any business, but creating a strategy that works for an entire franchise system can be even more difficult.  Once that strategy is developed, it needs to be supplemented with a social media policy that protects you and your franchisees.

Below are four things to consider as you develop a social media policy. Continue Reading Developing a Social Media Policy for Franchise Systems

You have worked hard to grow your business and brand.  The last thing you want to do is give it all away.  A carefully drafted non-competition agreement can protect your brand and trade secrets.

Well-drafted, enforceable non-compete agreements include the following elements:

Narrow List of Prohibited Activities

Courts are increasingly focusing on balancing former franchisees’ right to work against franchisors’ interests in preserving its trade secrets and protecting its brand from unfair competition.  For this reason, a court is unlikely to enforce a non-competition that is drafted to prohibit activities that would not adversely affect the franchisor’s rights or trade secrets.  For example, a court will likely strike down as too broad a non-compete that would prevent the former owner of a pizza restaurant franchise from working in any business that sells pizza of any type or quantity.   This is because the franchisor’s interests would not really be adversely affected if this former franchisee worked as a cashier at Trader Joe’s.  A more enforceable non-compete would prohibit such a former owner from managing, owning, or investing in a restaurant that primarily sells pizza.

Reasonable Term

As nice as it would be to keep a former franchisee from competing forever, courts will not enforce an unlimited term of non-competition. What’s considered reasonable can vary widely by state, so it’s important to talk to an experienced franchise attorney to determine what time period is considered reasonable in your and your franchisees’ jurisdictions.  The risk of defining the term for too long (and for drawing the restricted territory too broadly, as described below) is that the court will not enforce any part of the agreement.

Restricted Territory

A franchisor must define the territory in which the competitive activities are prohibited and, just like with the list of activities and the term, the territory must be drafted narrowly to be enforced by courts. Most typically, a franchise agreement non-compete will prohibit a former franchisee from competing within a set radius around the franchised location and other system locations.  The proper radius for the territory will depend on factors such as the jurisdictions involved, the uniqueness of the concept, or the ubiquity of the brand.

In today’s judicial climate, a franchisor must think carefully about each of these terms, but with careful drafting, the non-competition agreement can be a powerful defense for the franchisor.