If your franchise agreement is set to expire in 2020, you need to make an important decision: Is it time to let your franchise rights expire; or, do you want to renew? Dealing with the expiration of your franchise agreement involves a variety of different considerations, and there are several important facts you need to know. Here is an overview of some of the key factors you will need to keep in mind: 6 Considerations for Dealing with Franchise Expiration and Renewal 1. You Need to Provide Advance Notice if You Intend to Renew If you want to keep your franchise for another term, you will need to provide your franchisor with advance notice of your intent to renew. The amount of notice you need to provide will be determined by the specific terms of your franchise agreement. 2. You Will Also Need to Satisfy the Conditions for Renewal As a franchisee, your “right” to renew is not guaranteed. Your ability to secure a renewal term is subject to various conditions (which, again, are spelled out in your franchise agreement), and you will need to satisfy all of these conditions in order to keep your franchise beyond 2020. 3. You Might Need to Deal with Your Lease as Well If you have a lease for a retail or commercial location, then you will also need to see what your lease says about term and renewal. Does your lease expire concurrently with your franchise agreement? If so, what are the conditions […]

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We saw a lot of change in the franchise industry in 2019, and all indications are that this trend will continue through 2020. Recently, Score.org published an article highlighting four trends that have the potential to have a significant influence on franchisees – and the franchise industry as a whole – in the New Year. 4 Franchise Trends Poised to Shape the Industry in 2020 Trend #1: Demographic Shifts are Influencing the Market According to Score.org, three major demographic shifts are each having their own unique impact on the franchise industry. First, the organization notes, consumer demand is now dominated by the Millennial generation. Second, Baby Boomers are buying franchises in record numbers by drawing from their long-term savings. Third, seniors are “aging out of the workforce,” and this is creating more alignment between franchise ownership and franchise patronage. Together, these three factors mean that sectors such as health and wellness may be poised to dominate the industry long-term. Trend #2: Multi-Unit Franchise Ownership is Going Mainstream “[M]ore than half of all franchise units in the U.S. are owned and run by multi-unit operators.” This has not always been the case, and Score.org attributes this shift to the growing desire among prospective franchisees to, “establish a small business empire.” While being a multi-unit owner isn’t for everyone (taking financial standing and various other considerations into account), as more prospective franchisees continue to express interest, franchisors may begin doing more to make multi-unit opportunities more accessible to all. Trend #3: Homeowners […]

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Whether you have made it your New Year’s resolution to buy a franchise or you have been planning to leave your job for years and are finally ready to take the plunge, there are some important facts you need to know if you are planning to buy a franchise in 2020. Here are five tips from franchise attorney Jeffrey Goldstein: Tip #1: Do Your Research There are more franchise opportunities available today than at any prior point in history. While several concepts that were “emerging” just a decade ago are now firmly entrenched among the industry’s leaders, there are many untested concepts out there, and franchisors’ reputations can shift dramatically in a very short period of time. So, before you settle on one particular franchise, make sure you do your research. Tip #2: Choose a Franchise Concept with Staying Power In the same vein, when buying a franchise, it is important to choose a concept with staying power. What we mean by this is that you need to try to avoid buying a fad franchise. You will be investing a lot of time and money in your new business, so you need to be reasonably confident that there will be adequate consumer demand throughout the duration of your franchise agreement. Tip #3: Focus on Technology In recent years, technology has changed the way that many franchise systems operate, and Forbes.com recently published an article on how technology will transform life as a franchisee in 2020. When you are buying a […]

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Court Dismisses Franchisee’s Racial Discrimination Claim for Termination In case where plaintiffs-franchisees Nabil Gazaha and NAYAA, LLC (referred to individually and collectively as “Gazaha”) sued defendant KFC Corporation (“KFC”) setting forth claims for common law breach contract resulting from KFC’s termination of a franchise agreement and for race discrimination in violation of 42 U.S.C. § 1981, federal court in Virginia found, inter alia, that Gazaha failed as a matter of law to present evidence sufficient to establish a prima facie case of discrimination, or alternatively, any evidence of pretext necessary to rebut KFC’s asserted non-discriminatory reason for terminating the franchise agreement. KFC’s Motion for Summary Judgment on Defendants’ Counterclaims was GRANTED. [Excerpt Regarding Racial Discrimination from case] 2016 WL 1245010 United States District Court, E.D. Virginia, Alexandria Division. KFC CORPORATION, Plaintiff, v. Nabil GAZAHA, et al., Defendants. Civil Action No. 1:15-cv-1077 (AJT/JFA) Signed 03/24/2016 With respect to Gazaha’s claim in Count II for intentional race discrimination and unlawful termination in violation of 42 U.S.C. § 1981, the Court finds that he has likewise failed to adduce evidence sufficient to allow a reasonable trier of fact to find in his favor. 42 U.S.C. § 1981(b) forbids racial discrimination in the making and enforcing of contracts. Section 1981 claims are properly analyzed under the Title VII framework. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 n.1 (4th Cir. 2002). Accordingly, the complaining party must come forward with “direct evidence” of racial discrimination or satisfy the McDonnell Douglas burden-shifting scheme. Davis v. Am. Soc. […]

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Court Rules Best Western is not a Franchise and Thus Not Liable for Franchise Act Violations Best W. Int’l Inc. v. Twin City Lodging LLC, No. CV-18-03374-PHX-SPL, 2019 U.S. Dist. LEXIS 111696 (D. Ariz. July 3, 2019) In a recent case in which the Plaintiff Best Western International Incorporated (the “Plaintiff”) filed suit against Twin City Lodging LLC, Percy Pooniwala, and Santha Kondatha alleging multiple causes of action related to the termination of a Best Western Membership Agreement (the “Membership Agreement”), and in which the Defendants argued that the Complaint must be dismissed because Best Western failed to comply with the requirements of the Minnesota Franchise Act by failing to abide by the disclosure requirements of the Minnesota Franchise Act when selling the franchise to Twin City Lodging LLC, the Court refused to rule that the  Membership Agreement was unenforceable because the plain terms of the Minnesota Franchise Act denote that the statute only applies to franchisors and franchisees, and the Court found that the Plaintiff was not a franchisor, as the Complaint clearly identified the Plaintiff as a non-profit corporation and never identified the Plaintiff as a franchisor or the Defendants as franchisees, instead describing the Plaintiff as a membership organization. (Text of Excerpts from the Case Below) Best Western Int’l Inc. v. Twin City Lodging LLC United States District Court for the District of Arizona July 3, 2019, Decided; July 3, 2019, Filed No. CV-18-03374-PHX-SPL   Reporter 2019 U.S. Dist. LEXIS 111696 * Best Western International Incorporated, Plaintiff, vs. Twin […]

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