Monthly Archives: August 2019

5 Common Examples of Franchisor Antitrust Violations

Aug 30, 2019 - Blog by |

Antitrust is among the most-confusing areas of the law, even for attorneys. But, as a franchisee, understanding the antitrust principles that apply to the franchise relationship is important, as franchisor antitrust violations are common, and they can have severe negative ramifications for individual franchisees. So, as a franchisee, when is it time to speak with an antitrust attorney? Here are five of the most-common antitrust violations in franchising: Common Antitrust Violation #1: Unlawful Customer Restrictions Protected and “exclusive” territories are common in franchising; and, while dividing geographic territories amongst franchisees is generally permissible, there are other types of customer restrictions that can violate federal and state antitrust laws. When examining customer restrictions for potential antitrust issues, the franchisor’s intent and the practical effect of a restriction are both important factors. With regard to franchisor intent, if the purpose of a restriction is to limit customers’ options (i.e. by prohibiting franchisees from serving customers outside of their respective territories), then this is more likely to tend toward an antitrust violation. For example, if a franchisor wants to prevent franchisees from competing with one another on price (in order to drive up royalties and marketing fund contributions), this could be an unlawful practice. On the other hand, if a franchisor simply restricts franchisees from actively marketing outside of their respective territories (but does not restrict the customers they can serve), this is an industry-standard practice that generally does not raise antitrust implications. This is a complicated and nuanced area, and franchisees who […]

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7 Considerations for Choosing a Lawyer to Perform Your Franchise Business Review

Aug 27, 2019 - Blog by |

Not only does buying a franchise involve a making sizable financial investment, but it also involves entering into a long-term legal relationship that provides very limited opportunities to protect your investment if something goes wrong. As a result, in addition to working with your financial advisor, it is also important to work with an attorney who can help you assess the legal risks involved and, potentially, negotiate more-favorable terms into your franchise agreement. These legal services are commonly referred to as a franchise business review. As with all aspects of buying a franchise, when choosing a lawyer to perform your franchise business review, you need to make an informed decision. A lawyer who doesn’t focus his or her practice on franchise law won’t be able to provide you with the insights you need, although he or she may be able to provide general legal advice about the risks entailed by your franchise agreement. Likewise, a lawyer who primarily represents franchisors will lack the perspective needed to view the issues from your point of view and might even have interests that are in conflict with yours. So, what is the best option? When you need a franchise business review, you need a franchise lawyer who focuses exclusively on representing prospective and current franchisees. What Factors Should You Consider When Choosing a Lawyer for Your Franchise Business Review? While there aren’t many franchise lawyers in this category, there are more than one. So, what factors should you consider when choosing a lawyer […]

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Franchise Industry Statistics: Notable Numbers in Franchising

Aug 23, 2019 - Blog by |

The franchise industry is constantly evolving. Statistics often change dramatically from year to year, with economic conditions heavily influencing the growth, retraction and overall stability of franchise systems in virtually all sectors. Franchisedirect.com recently published an infographic that provides an interesting overview of franchising’s history and some notable statistics on the industry. Here are some of the numbers that stood out to us the most: An Average of 300 Companies Start Franchising Each Year According to Franchisedirect.com, “[a]n average of 300 new brands start franchising each year.” This means that on more days than not there is a new opportunity for prospective franchisees to explore. Franchising saw its first boom in the late 1950s, and approximately 60 years later the industry is – at least by some standards – stronger than ever. There are More than 750,000 Active Franchised Outlets The infographic indicates that there were expected to be more than 750,000 franchised outlets by the end of 2018. It also notes that one in seven businesses is a franchise. Of these franchises, slightly over half (53 percent) are owned by multi-unit franchisees. Just under half of all franchisees own a single outlet. More Than 80 Percent of Franchises are Local or Regional Brands 50 percent of franchises are classified as “local” brands, while 34 percent are classified as “regional” brands. This means that just 16 percent are the national and global brands that most people picture when they hear the word, “franchise.” While this statistic may be surprising to […]

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When Can Franchisees Pursue Antitrust Claims Against Their Franchisors?

Aug 22, 2019 - Blog by |

If you are like most dissatisfied franchisees, you want to get out of the system, and you are prepared to do so by all legal means available. However, you also probably know that your rights under your franchise agreement are limited. In fact, if you have reviewed the “Termination” section of your agreement, you may have noticed that you don’t actually have any termination rights at all (in contrast to your franchisor, which probably has multiple options for forcing you out of the franchise system). Fortunately, an antitrust attorney who is familiar with the franchise relationship may be able to help. What is Antitrust Law? Antitrust law prohibits private parties (i.e. franchisors, vendors and other third parties) from entering into agreements that constitute unreasonable restraints on trade. Antitrust law has its origins in consumer protection, with the Sherman Antitrust Act of 1890 (the “Sherman Act”) outlawing business arrangements (which, at the time, used a specific form of trust) that created monopolies and restricted market competition. The Sherman Act remains relevant today, and various other laws at the state and federal levels prevent anti-competitive conduct and establish other antitrust protections as well. How is Antitrust Law Relevant to Franchisees? So, how is antitrust law relevant to franchisees? In the franchise context, the Sherman Act and other state and federal antitrust laws prohibit franchisors from entering into contracts that either (i) force franchisees to pay more for products and services than market forces would dictate, or (ii) restrict franchisees’ ability to offer […]

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Digital Marketing for Franchisees: What Restrictions Apply?

Aug 16, 2019 - Blog by |

From Instagram to Google Maps, in today’s world, getting found and interacting with customers online are among the most-effective ways to build a successful business. The International Franchise Association (IFA) recently published the results of a poll in which franchisees were asked to list their most-effective channels for generating customer leads, and four of the top six involved digital marketing. Social media came in second (behind “referrals”) at 55.26 percent, followed by search engine optimization (SEO), pay-per-click advertising and content marketing. Radio and television tied for second-to-last (before billboards) at just 2.63 percent. But, as a franchisee, your ability to market online is limited. As with all other aspects of your business, you can only say and do what is permitted by the terms of your franchise agreement and the franchisor’s operations manual. If you build an online presence in a non-compliant manner, your franchisor may force you to make changes (which could confuse your followers), it may force you to transfer your accounts and it may even declare you in default under your franchise agreement. What Can (and Can’t) Franchisees Do Online? So, as a franchisee, how can you market your business online? While individual franchisors’ rules and restrictions vary, some examples of potential restrictions include: 1. Approval of Advertising Materials Traditionally, franchisors have typically required franchisees to obtain pre-approval of any advertising materials they intend to use. But, as a franchisee, you cannot wait days (or weeks) to find out if you have permission to post a photo […]

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ACQ5 LAW AWARDS 2019

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ACQ5 GLOBAL AWARDS 2019, JEFF GOLDSTEIN, GOLDSTEIN LAW FIRM, PLLC

ACQ5 LAW AWARDS 2019

US (New York)
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of the Year
ACQ5 GLOBAL AWARDS 2019, GOLDSTEIN LAW FIRM, PLLC

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