Search Results: franchisor control

Jan 23, 2015

Although the Vann decision is indisputably a franchisor victory, it would be an expensive mistake for franchisors and their advocates to interpret the case as signaling any serious shift in the way that agencies, courts and legislatures around the country (or even other courts and agencies in California) view the issue of franchisor vicarious liability, conceptually or practically. As I wrote in a franchise column recently, "A recent case in California federal court, Vann v. Massage Envy Franchising LLC, 2015 WL 74139 (S.D.Cal. 2015), has given franchisors a win on a fact-specific application of the "employer control" issue in a vicarious liability setting. In this case, Mr. Vann, a massage therapist who worked at various Massage Envy franchisee spa locations, filed a class-action complaint against the franchisor MEF, and two franchisees, alleging violations of California's minimum-wage laws." Read More

Jan 31, 2024

Artificial intelligence (AI) is officially here. In 2024, we anticipate that franchisors in a wide range of industries will seek to adopt AI technologies in various capacities—whether they fully understand AI’s capabilities and implications or not. Some franchisors are also turning to robots to streamline their operations, and this is a trend that we expect to see continue throughout the year as well.

Aug 31, 2022

As a prospective franchisee, you need to know that you are making sound decisions based on all pertinent information. You need to feel confident in your buying decision, and you need to go into your franchise opportunity with your eyes wide open.

Jun 16, 2022

In a recent article on the Franchise Direct blog entitled, “Litigation and Complaints Shouldn’t Always Stop You from Buying a Franchise,” the author makes the case for digging deeper if you have concerns about a franchisor’s public reputation or private litigation. While this is sound advice, it is important not to discount the risks of getting into a business relationship with a franchisor that is dealing with lawsuits, as national franchise attorney Jeffrey M. Goldstein explains below.

Sep 28, 2021

In August 2021, the Franchise Times reported that about 30 percent of McDonald’s dining rooms in the United States remained closed as a result of the pandemic. However, the article also quoted McDonald’s CEO Chris Kempczinski as stating that, “By Labor Day, barring resurgences, [the number of restaurants with open dining rooms] will be nearly 100 percent.”

Jul 30, 2021

With new variants spreading rapidly and vaccination rates remaining below what is necessary to gain control of the virus, the COVID-19 pandemic is continuing to play a major role in the way that many franchisees conduct business. Franchisees must make difficult decisions about whether (and to what extent) to impose restrictions and requirements, and they must do so while receiving guidance that seems to shift on a near-daily basis. They must take their franchisors’ requirements into account as well.

Dec 23, 2020

Tim Hortons Franchisee Association Hits Brick Wall on Case Against Franchisor In a scathing rejection of a complex case filed by an international franchise association, the US District Court for the Southern District of Florida refused to recognize that the franchisee association of Tim Hortons members had associational standing to sue for myriad alleged unfair acts and practices including supply price-gouging, franchisee equity-stripping, and misuse of the franchise advertising fund; similarly, the court rejected the viability of those same claims on substantive grounds as well. Great White N. Franchisee Ass’n-USA v. Tim Hortons USA, Inc., No. 20-cv-20878, 2020 U.S. Dist. LEXIS 239160 (S.D. Fla. Dec. 18, 2020)   Excerpts of the Case: Franchisee Counsel:   For Great White North Franchisee Association-USA, Inc., Plaintiff: Natalie Marlena Restivo, LEAD ATTORNEY, Adam Gruder Wasch, Wasch Raines, LLP, Boca Raton, FL; Gerald A. Marks, PRO HAC VICE, Marks & Klein, LLP, Red Bank, NJ. Franchisor Counsel: For Tim Hortons USA, Inc., Defendant: Michael D Joblove, LEAD ATTORNEY, Aaron Seth Blynn, Genovese Joblove & Battista, Miami, FL; Adam Acosta, John Mark Gidley, PRO HAC VICE, White & Case LLP, Washington, DC. For Jose E. Cil, Defendant: Aaron Seth Blynn, Genovese Joblove & Battista, Miami, FL. Judges: BETH BLOOM, UNITED STATES DISTRICT JUDGE. Opinion by: BETH BLOOM Opinion BACKGROUND This case involves an allegedly illegal and predatory business scheme implemented by THUSA’s holding company to convert the Tim Hortons franchise system into a supply chain business resulting in large profits at the expense of Plaintiff’s franchisee members. Tim Hortons […]

Aug 24, 2020

As discussed in a recent article published by Nation’s Restaurant News (NLN), some franchisors have begun offering financial relief packages to their franchisees during the COVID-19 crisis. According to NLN, major restaurant franchisors including Yum Brands (KFC, Pizza Hut and Taco Bell), Subway, McDonald’s, Chick-fil-A and Qdoba are offering relief ranging from, “deferring all 2020 capital obligations for remodels and new unit development through the end of this year,” to deferral of royalty and rent payment obligations. These relief packages come as these (and other) franchisors are requiring franchisors to severely limit their operations in order to help combat the spread of the novel coronavirus. In many franchise systems, franchisees have the option to implement social distancing and other safety protocols consistent with local practices as well. Regardless of the impetus, many franchisees are struggling as a result of the economic impacts of COVID-19, and this makes financial relief packages an attractive option for franchisees to whom they are available. Do Franchisor Relief Packages Come with Strings Attached? Before accepting financial relief packages from their franchisors, however, franchisees need to make sure that the relief being offered does not come with strings attached. Or, if it does come with strings attached, then franchisees need to know what these strings are, and they need to decide if the associated costs and risks are worth it. If royalty payments are being deferred, are they being deferred with interest? Will past-due royalties eventually be due in a lump sum; and, if so, when? […]

Sep 21, 2019

The Washington Supreme Court has recently ruled Franchisors cannot exceed ‘fair and reasonable prices’ in selling products and services to their franchisees. Specifically, the Court held that under that state’s Franchise Relationship Act that it is an unfair or deceptive act or practice for any person to “sell, rent, or offer to sell to a franchisee any product or service for more than a fair and reasonable price.”  The Washington Supreme Court proceeded to define prolific components of a definition of “fair and reasonable price” for such products. The Washington Court explained: The plain language and the legislative history of the FIPA make clear that a broad understanding of the market and market forces must inform a fact finder determining whether prices are fair and reasonable under the FIPA. A fact finder must take into consideration market forces writ broadly. This includes what the district court relied on—the price at which the franchisor acquired the products or services—but reaches beyond. The prices of competitor franchisors should be taken into account, including whether the prices of all franchisors are the same. So, too, should the statements of profit margin made by the franchisor. Other relevant factors include the franchisor’s charges to other franchisees for the same or similar products or services; what other similarly situated franchisors charge similarly situated franchisees for the same or similar products or services; business and industry practices; the price the franchisor pays for the products or services; and the price at which the franchisee could obtain […]

May 15, 2017

GLF Prevails on MTD in Case Against Bathtub Manufacturer Franchisor The definition of franchise is not always clear, as this case shows. A marketer/seller/installer of walk-in bathtubs in the New York and New Jersey area could qualify as a franchise with standing to assert counterclaims against Safe Step Walk In Tub Co. (Safe Step) under the franchising laws of those states and Connecticut and Rhode Island, the federal district court in New York City has ruled. Therefore, a motion by Safe Step for dismissal of these counterclaims was denied. Safe Step alleged that agreements between the parties constituted franchises under the Connecticut Franchise Act, New Jersey Franchise Practices Act, New York Franchise Act, and Rhode Island Franchise Investment Act. Given the basis of the allegations and the plain terms of the agreements, it was easy to find that the parties’ relationship could plausibly constitute a franchisor-franchisee relationship under the FTC Rule, the court noted. The FTC Rule had three main prongs in its definition of a franchise: (1) the use of the franchisor’s marks; (2) the franchisor’s provision of marketing assistance or control over the franchisee’s operations; and (3) the franchisor’s collection of a franchise fee as a condition of the franchisee’s commencing operation. Here, the first prong of the FTC Rule was undoubtedly met at because the installer distributes goods that are identified or associated with Safe Step’s trademarks. The second prong was also met, since the alleged involvement by Safe Step in the installer’s business operations could amount […]