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?

In 2020, banks had to contend with general new underwriting guidance in SOPs, COVID-19 specific underwriting guidance, and the rules about the Paycheck Protection Program (“PPP”). All of these circumstances impacted the availability of funding for franchisors and franchisees. Despite the uncertainties about the economy and trend towards more conservative lending, the good news is

The COVID-19 pandemic has dramatically impacted business in 2020, from government stay at home orders that prevented operations to adjusted customer service capacity or additional safety procedures. Some of these changes to your franchise system may be what the FTC or states regard as “material”, meaning the change likely affects a prospective franchisee’s conduct or

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

COVID 19 undoubtedly impacted your business. Franchise systems in a wide array of industries experienced temporary closures, forced innovation in the delivery of goods and services, and altered unit economics. Some of these changes may qualify as “material” changed under state and federal law and will need to be accounted for in an amendment to the 2020 FDD.  The federal and state requirements are outlined below and will help you to determine if and when you need to amend your FDD because of COVID-19.

Continue Reading Do I Need to Amend My FDD to Account for the COVID-19 Pandemic?

The FTC Rule allows some franchisors to be exempt from the franchise disclosure document requirements. There are seven stated exemptions, and some of them are tied to certain monetary values. The FTC is authorized to adjust them every fourth year based upon the Consumer Price Index so that the laws are still relevant in changing economic conditions. The Commission is required to update the monetary exemption thresholds in 2020.

The following adjustments will go into effect on July 1, 2020:

Continue Reading Franchise Exemption Threshold Adjustments Coming in July 2020

California AB5 employee contractor

Perhaps you’ve heard about the California Legislature’s efforts to target misclassification of employees in the gig economy.

While the law passed in September 2019 had obvious impacts on companies like Uber and Lyft, it can also significantly affect franchisors. AB 5 increases the likelihood that a franchisee or franchisee’s employees will be viewed as employees of the franchisor, which dramatically increases the franchisor’s obligations to them.

Read on to learn how legislation in California may effect you.

Continue Reading Mitigating a Franchisor’s Risks under California AB 5