Competition is Fierce: FTC’s New Rule Banning Non-Compete Agreements

On April 23, 2024, the Federal Trade Commission (“FTC”)approved a new rule (“Rule”)  banning most non-compete clauses as an “unfair method of competition.” The Rule is set to take effect on September 4, 2024. Franchisors should know the ramifications of the Rule.  Luckily, you have us! Here’s the skinny: Overview The Rule does not prohibit non-compete agreements between franchisors and…

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Navigating the Impact of NLRB’s Latest Joint-Employer Rule on Franchisors

The New Rule The National Labor Relations Board (NLRB) issued a groundbreaking joint-employer rule on Oct. 26, 2023. This rule, slated to redefine joint-employer relationships, carries substantial implications for franchisors. The new rule, effective February 26, 2024, changes the definition of a joint employer. Previously, joint employer status was established when an entity had  direct and…

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Unraveling Averages and Medians for your Item 19 Financial Performance Representation

Cracking the code of your Franchise Disclosure Document (FDD) may feel a bit like you’ve been thrust into a high-school math test. But fear not! We’re here to turn those numbers from daunting to doable. When a franchisor has a large number of franchised units, the use of averages may be the best way to show financial information in your Item 19 financial performance representation.…

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Best Practices for Renewing a Franchisee’s Franchise Agreement

Every franchise agreement has an expiration date. Accordingly, franchisors need to know how to properly handle franchise renewals and accompanying successor agreements. Although a franchisee’s right to renew is usually subject to them meeting certain requirements, there is a legitimate litigation risk from franchisees who are not renewed against their wishes. The good news – your friends here at…

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The FDD Receipt Page: Why the Last Page in the FDD Matters a Lot

The receipt page is the last page of the FDD and serves as the prospective franchisee's acknowledgement of having received the document. Once signed, it provides evidence that the franchisor has fulfilled its obligation of providing the FDD in accordance with the law. The receipt page is a simple note at the end that the franchisee signs to say, "Yep, I got this book and I've read it." It's…

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Growing Your Brand: Multi-Unit Franchises

When you're planning to grow your brand, the Area Development model (or Multi-Unit model) is a strategic path for rapid growth. Why Multi-Unit Franchising? An area developer (or multi-unit franchise owner) is a single person or group runs several outlets of your brand in a certain area. Multi-unit franchising can help your brand grow fast. It lets you cover larger areas quickly, giving your…

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Little Symbols, Big Difference

If you’ve ever browsed the aisles of a grocery store, chances are you’ve passed by a few dozen registered trademark symbols without even noticing. Look around right now, wherever you are. Is there a can of Coca-Cola sitting on your end table? A bottle of Advil there on your desk? Are you drinking water from a Nalgene water bottle? Any of these items will bear the subtle but familiar ® denoting a…

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New Franchise Policies that Impact Franchise Questionnaires are in effect as of January 1, 2023

On January 1, 2023, a new policy went into effect that will apply to franchisors that use franchise questionnaires as part of their franchise sales process. The North American Securities Administrators Association (“NASAA”) policy places limitations on the FDD questionnaire. In addition, a California franchise law went into effect on January 1, 2023, related to the FDD questionnaire, and…

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What are Descriptive Trademarks?

So you’ve just been told that you may not be able to register your trademark because it is “descriptive.” What does that even mean? It’s my mark, why am I not allowed to register it? The best place to start is with a quick overview of trademarks. A trademark can be classified into five different categories based on their distinctiveness: (1) generic; (2) descriptive; (3) suggestive; (4)…

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One of my franchisees wants to sell their business. What should I do, and what should I avoid?

Franchisors expect franchisees to remain in their system. The franchise relationship is built through significant effort by both franchisors and franchisees over a long period of time. Franchise relationships often last 30+ years. However, at some point, that relationship has to end in some fashion. The franchised business can close, the system can shut down, the relationship could be terminated,…

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