Unfairness in the franchise relationship is among the key factors that lead to franchisee failures. Without the information, support and legal protections they need, franchisees can struggle to earn a reasonable profit, and they can face substantial losses when their franchises fail. A recent congressional report discusses potential solutions to the current unfairness in franchising—including what franchisors, federal regulators and state authorities can do to help protect franchisees. Here, franchise lawyer Jeffrey M. Goldstein summarizes some of the most notable recommendations from the report:
Author: Goldstein Law Firm
In April 2021, the Office of Nevada Senator Catherine Cortez Masto released a report titled, Strategies to Improve the Franchise Model: Preventing Unfair and Deceptive Franchise Practices. The report provides a detailed look at the current state of franchise regulation in the United States and offers suggestions for what state and federal authorities can do to improve protections for franchisees.
It is no secret that the economic impacts of the COVID-19 pandemic have hit franchising particularly hard. Many franchises who were already struggling to turn a profit while paying their royalties and marketing fund contributions saw their revenue drop substantially, and many went out of business as a result. Among those who survived, long-term outlooks vary, and a significant amount of uncertainty remains.
FranConnect, a well-known franchise management software provider, recently released a report detailing the economic impacts of the COVID-19 pandemic on the franchise industry. The report is available for download, and the International Franchise Association (IFA) has summarized some notable data from the report on its website. Here, franchise attorney Jeffrey M. Goldstein shares his thoughts on some of the key figures and what they might mean for current and prospective franchisees.
A recent article in the Franchise Times highlights some kid-focused franchises that are “tap[ping] into youth activity demand” during the COVID-19 pandemic. The article discusses how the impacts of the pandemic on children have resulted in an increased demand among parents for organized, educational, enriching and fun activities outside of school. If you are thinking about buying a kid-focused franchise, here are three important legal considerations to keep in mind from franchisee lawyer Jeffrey M. Goldstein:
Living with the effects of the COVID-19 pandemic has conditioned many people to do things from home. From working to shopping to watching newly-released movies, many Americans have fully adjusted to doing everything from the comfort of their couch or dining table. As a result, many retail businesses are still struggling as restrictions begin to lift, and this includes fast-casual and sit-down restaurants.
Buying a franchise is a bigger investment than most people can afford on their own. Fortunately, there are a variety of financing options available. However, each of these options comes with certain risks and limitations, and prospective franchisees must think carefully about which option makes the most sense for their individual circumstances. An experienced franchisee lawyer can help you make an informed decision when it comes to choosing between options including:
When buying a franchise, one of the most important steps in the due diligence process is to carefully review the franchise agreement. The franchise agreement governs the terms of the relationship, and it covers everything from the opening deadline to the franchisee’s obligations post-termination. Given the importance of the franchise agreement – in addition to its density and complexity – the best way to ensure that you understand its terms is to hire a franchise lawyer to review it for you.
The COVID-19 pandemic has impacted the franchise industry in unprecedented ways. In addition to fundamentally changing the way that many franchisors and franchisees operate, the pandemic has heavily influenced franchise agreement negotiations. Here, franchise attorney Jeffrey M. Goldstein discusses five franchise agreement provisions that require careful consideration in the wake of the pandemic:
The IFA Legal Symposium is an annual event that brings together franchise lawyers from across the United States and around the world to discuss recent legal developments in the world of franchising. This year’s Symposium is being held virtually, and many of the topics that will be covered during the event are signs of the times as well.