VALUABLE INSIGHTS FROM ARTICLES ABOUT FRANCHISING
- Better Late Than NeverIn the most significant franchise regulatory development since the Federal Trade Commission revised its Franchise Rule (16 CFR Part 436) in 2007, the rules governing financial performance representations— information conveyed to prospective franchisees disclosing historic or projected company-owned or franchised unit gross sales, net profits or both—are undergoing their most sweeping transformation in nearly a quarter century.
- New Rules Governing Financial Performance RepresentationsFor the first time ever, a New York court has held that late delivery of a franchisor’s Franchise Disclosure Document, standing alone, will not trigger liability under the New York Franchise Act without proof that the franchisee sustained damages directly attributable to the late FDD delivery.
- What is a franchise?
The New York Franchise Act is perhaps the nation’s toughest franchise law — and one seminal reason why is that New York’s definition of the term “franchise” is the broadest in the nation, subsuming certain licensing, distribution and other arrangements which are not deemed to be “franchises” under any other federal or state franchise law, rule or regulation.
- The fluid nature of franchise law in New York
State and federal laws regarding franchise agreements, along with a tough economy, has prompted many recent legal disputes. For example, the National Labor Relations Board recently held that McDonald’s could be named as a defendant in lawsuits aimed at labor violations alleged by its workers. McDonald’s had claimed that workers in franchised stores could only sue the franchisee, not McDonald’s itself. This is only one example: Generally, franchise litigation increases in a competitive business environment, when it is more likely for a franchise operation to fail and workers to feel the effects of a bad economy.
- NLRB contends franchisors are joint employersOn July 29, 2014 Richard Griffin, the General Counsel of the National Labor Relations Board (“NLRB”) determined that McDonald’s Corporation could be deemed a “joint employer” of its franchisees’ employees asserting claims of alleged violations of the National Labor Relations Act (NLRA). As a consequence, Mr. Griffin announced on December 29, 2014 that the NLRB filed charges against McDonald’s Corporation as a joint employer in 86 allegedly meritorious unfair labor practice complaints filed against McDonald’s and its franchisees by those franchisees’ employees over the past 24 months.