Technology has transformed the way franchisors and franchisees do business. From the introduction of electronic point-of-sale (POS) systems to the advent of social media, all types of technological innovations have made their way into the franchise realm. Recently, the rate of innovation has sped up significantly, and this means that franchisees are being asked (or forced) to adopt new technologies with increasing frequency. A recent article on Forbes.com examines six technological trends that are likely to have a big impact on franchising in 2020. While we have seen these innovations make their way into many franchise systems already, we expect even more franchisors to require franchisees to adopt these technologies in 2020 and beyond: 1. Artificial Intelligence (AI) While artificial intelligence used to be fodder for sci-fi movies, today it is an important tool for many different types of businesses. Franchisors and franchisees are utilizing AI for everything from managing inventory to anticipating market demand, and many are finding that it promotes efficiency while also providing a leg up on the competition. 2. Digital Payments Today, mobile franchisees can accept credit card payments on the go, and customers can pay at the register with a swipe of their phone. Making it easier and faster for customers to pay means that more customers are likely to buy and that the checkout process is quicker than it used to be. This is a win-win solution that we expect will become much more commonplace in 2020. 3. Delivery Apps Third-party delivery apps like […]

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Franchise Direct is a resource website that publishes an annual list of Top 100 Global Franchises. Like other ranking platforms, Franchise Direct relies on its own methodology in deciding which franchises make the list and in what order, and Franchise Direct bases its rankings on factors including: System size System revenue System age Stability and growth Market expansion Adherence to franchisee support and training best practices Environmental policy Social responsibility According to Franchise Direct, its analysis of these factors is intended, “to offer an objective look at some of the world’s top franchise operations.” What Can 10 Years of Rankings Tell Us about the Franchise Industry? Since we’re at the end of the decade (at least by some people’s calculation), Franchise Direct took the opportunity to look back at its Top 100 Global Franchises lists from the past 10 years. Here are some of the trends they identified: 180 franchises broke into the top 100. Over the past 10 years, 180 different franchise systems have been ranked among the top 100 by Franchise Direct. This suggests a large amount of stability among the top echelons, but also clearly indicates that many franchises rise and fall (and come and go) over time. Franchise Direct also reports that, “37 franchises went 10 for 10, making our Top 100 ranking every year of the past decade.” Nearly 40 percent of the top 100 were food franchises. According to Franchise Direct, 38 percent of all franchises ranked in the top 100 over the past […]

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Multi-Unit Franchisee’s Failure to Sign both Franchise Agreements Contemplated by its Development Agreement Leaves its Dispute with its Franchisor Dickey’s Outside the Scope of any Mandatory Arbitration Provision By: Jeffrey M. Goldstein In a recent decision by the United States Circuit Court for the Tenth Circuit, a franchisee’s (Campbell’s) case against its franchisor (Dickey’s), for various business torts was permitted to remain and  proceed in federal court after the circuit court affirmed the district court’s decision that Dickey’s could not identify a valid written agreement that expressed a mutual intent to arbitrate the dispute. Campbell Invs., LLC v. Dickey’s Barbecue Rests., Inc., 2019 U.S. App. LEXIS 26980 *; __ Fed. Appx. __; 2019 WL 4235345 (10th Cir. 2019). The franchisee, Campbell Investments, a Utah-based company, purchased and briefly operated a Dickey’s Barbecue franchise in South Jordan, Utah. The business relationship quickly deteriorated, and Campbell sued Dickey’s. Although Dickey’s argued that a franchise operating agreement requires arbitration to resolve disputes between the parties. Campbell contended that it never signed an operating agreement when it purchased the restaurant from a former franchisee. The district court ruled in favor of Campbell, denying Dickey’s motion to force the case out of court and into arbitration. Even though it was clear, and both parties agreed, that they had been conducting the franchise business pursuant to some form of operative understanding, the district court held that Dickey’s could not identify a written agreement that contained an arbitration requirement. Making matters somewhat murky on this issue was that […]

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The Franchise Times (FT) recently published its “Fast & Serious” list for 2019, which it dubs as its ranking of the “smartest-growing franchises.” According to FT: “Franchise Times created a formula to identify fast-growing franchise systems that also have staying power. . . . [The formula includes] percentage sales growth, percentage unit growth, dollar sales growth and numerical unit growth over the past three years. The database for the project is the Franchise Times Top 200+, our annual ranking published in October of the largest franchise systems by revenue. Haskin identified the companies that submitted information for all three years for that project, then selected for analysis those with systemwide sales above $40 million.” The list includes franchises in many of the sectors you would expect – like fitness and fast-casual dining – as well as some that you might not – like eyelash extensions and pest control. Here is the complete list from 1-40 (more information about each franchise is available through the link above): Club Pilates Orangetheory Fitness Burn Boot Camp Fyzical Therapy & Balance Centers Amazing Lash Studio Restoration 1 Blaze Pizza 9Round uBreakiFix Goldfish Swim School Freshii Walk-On’s Bistreaux & Bar Circle K The Halal Guys Nothing Bundt Cakes Mosquito Joe Planet Fitness Chicken Salad Chick HomeVestors Hand & Stone Tropical Smoothie Café Nekter Juice Bar Anytime Fitness United Real Estate TeamLogic IT Freddy’s Frozen Custard & Steakburgers Jersey Mike’s Subs Workout Anytime Profile by Sanford Dogtopia 911 Restoration Sola Salon Studios Black Bear Diner The […]

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Allegedly Fraudulent Truck Independent Contractor Relationship Held to Fall Within Confines of Ohio Business Opportunity Act By: Jeffrey M. Goldstein In a recent federal court case in the Northern District of Ohio, the Court denied Defendants’ Motion to Dismiss the Plaintiffs’ Ohio Business Opportunity Act (“OBOA”) claim based on alleged fraud. Goodwin v. Am. Marine Express, Inc., No. 1:18-cv-01014, 2019 U.S. Dist. LEXIS 190965 (N.D. Ohio Nov. 4, 2019). The issue decided by the Court was whether the business relationship between the Plaintiffs and Defendants was legally a “business opportunity” covered by the OBOA. The process engaged in by the Court in determining whether the business relationship was a ‘business opportunity’ is very similar to that carried out by courts in determining whether certain distribution relationships fall within the confines of various state and federal franchise laws. As alleged in the Goodwin Complaint, AMX was a common carrier based in Cleveland that provided intermodal drayage, local/regional cartage, and over the road trucking services, whose customers shipped goods via tractor trailers operated by company-employed drivers or owner-operators, with dedicated leased units. Per Plaintiffs, as part of their “fraudulent scheme,” the individual Defendants directed AMX to transfer titles of semi-truck cabs that they intended to lease to owner-operators, like Plaintiffs, to Gurai Leasing through lease agreements called “Independent Contractor Agreements.” According to Plaintiffs, AMX and Gurai Leasing–as directed and controlled by the individual Defendants–concealed from them the terms of the lease and/or purchase, misrepresented and concealed from them the party from whom […]

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Indentured Servitude in the 21st Century: Employee and Franchisee Noncompete Covenants By:      Jeffrey M. Goldstein Founding Partner – Goldstein Law Firm, PLLC www.goldlawgroup.com Introduction In a recent decision regarding the right of a former franchisee to operate and work after the conclusion of its franchise agreement, the North Carolina Superior Court (the “Court”) held unenforceable a post-term covenant not to compete (“CNC”). Window Gang Ventures, Corp. v. Salinas, 2019 NCBC LEXIS 24, 2019 NCBC 23, 2019 U.S.P.Q.2D (BNA) 115878, 2019 WL 1471073. However, in so ruling, the Court also found that the Franchisor nevertheless had a legal interest protected by trade secret misappropriation and unfair trade practices laws. The franchisor in Window Gang Ventures, Window Gang Ventures, Corp. (“Window Gang” or “Franchisor” or “Plaintiff”) had franchise locations in 20 states, and “engaged in the business of operating or franchising ‘Window Gang’ locations for residential, commercial, industrial and high-rise cleaning services including window cleaning, blind cleaning, gutter cleaning, window tinting, chimney sweeping, dryer vent cleaning, roof washing, oil remediation, no slips floor, and low and high pressure spray applications.” The Defendant Gabriel Salinas (“Salinas”) was the President of Defendant The Gang Group, Inc. (“Gang Group”), and Defendant Window Ninjas, LLC (“Window Ninjas”).  Defendants Red Window, LLC (“Red Window”), Orange Window, LLC (“Orange Window”), and Blue Window, LLC (“Blue Window”) (together, the “Affiliated Defendants”) are limited liability companies organized by Salinas to operate Window Gang franchises in South Carolina, Tennessee, and Virginia, respectively. The factual background of the case, some of […]

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