As reported in a recent article on franchise news site BlueMauMau.org, pizza franchise Little Caesars is launching a pilot program that it plans to roll out to franchised locations nationwide in 2018. The program includes a new app ordering process and in-store “Pizza Portals.” Once a customer places an order through the app, “[t]he app will notify the customer when the order is ready . . . they skip the line and go directly to the Pizza Portal and punch in a 3-digit pin or scan a QR code. Then the door on the customer’s secured compartment opens and they take their hot, fresh order.” According to the franchisor’s president and CEO, “We changed the pizza game when we introduced HOT-N-READY. We think RESERVE-N-READY featuring our breakthrough Pizza Portal has the potential to do it again.” When Are Franchisees Required to Adopt New Technologies? While Little Caesars franchisees are likely already contributing to the cost to update the Little Caesars app through their royalties (and potentially other fees as well), when it comes to installing the Pizza Portals in their stores, franchisees are likely to bear the full financial burden. Franchise agreements commonly include provisions requiring franchisees to adopt system-wide changes at their own expense, and this includes adopting new technologies. Although some franchisees will find success negotiating limited requirements to update, uniformity is a hallmark of the franchise model, and franchisors typically prefer to reserve broad rights to impose their will on their franchisees. What are the Risks of […]

Read More

You are planning to buy a franchise, and one of the benefits you are most looking forward to is the fact that you will have an exclusive territory. Once you sign your franchise agreement and pay the initial franchise fee, you will be the only one operating under your franchisor’s trusted brand and proven business system for miles around. But, is your territory really exclusive? Not all franchisors offer exclusive rights, and those that do not are not necessarily forthcoming about the limited protections they offer (if they offer any at all). Here are some important considerations to keep in mind when trying to interpret the territory provision of your franchise agreement: 4 Ways Territory Rights Not Be What They Seem 1. Your Territory is Protected but Not Exclusive. Many franchisors offer territory rights that are protected but fall short of being truly exclusive. The most common example of this is a reservation of rights for the franchisor to sell, “through alternate channels of distribution.” The territory may even be labeled as “exclusive,” and then have this carved out as an exception. 2. Your Territory is Not Protected at All. Some territory provisions are written to exclusively protect the franchisor. Consider this: “Franchisee’s territory (the ‘Territory’) is the geographic area within a two-mile radius of the franchised outlet. Franchisee may not sell outside of the Territory without Franchisor’s express written consent.” This provision “grants” a territory, but what does it really say? There is no protection, and all it really […]

Read More

In a previous article, we highlighted the importance of asking questions during the due diligence process, and we discussed four types of issues that demonstrate why franchisees should not rely on franchisors’ Franchise Disclosure Documents (FDDs) and marketing materials alone. We also mentioned the importance of talking to both current and former franchisees. This article covers some basic tips and questions to ask when contacting current and former franchise owners. How to Find Current and Former Franchisees But, before we get ahead of ourselves, how do you contact current and former franchisees? Fortunately, the requirements of Item 20 of the Franchise Disclosure Document (FDD) make this simple. In Item 20, franchisors must disclose contact information for: Current franchisees, Franchisees who have left the system within the past year, and Franchisees who have not communicated with the franchisor within the past 10 weeks. When contacting these individuals, keep in mind that they may have additional references as well. They may have an older version of the FDD that they are willing to share; or, they may know of other current or former franchisees who can impart particularly-valuable information. Questions to Ask Current and Former Franchisees During Due Diligence Once you start reaching out to current and former franchisees, what types of questions should you ask them? Here are some general recommendations: 10 Questions for Current Franchisees Has the franchise opportunity met your expectations? In what ways is operating your franchise different from what you expected? Are you consistently able to meet […]

Read More

When exploring franchise opportunities, it is easy to become committed to a particular brand and system early in the process. When this happens, for many people the due diligence process becomes a formality – a way to find affirmations that you have already made the right decisions. But, this can be a mistake. Many franchisors rely on their ability to make a good first impression, and they do not want prospective franchisees to dig deeper into the system. They do not want prospects to ask about things like carve-outs from their territorial rights, and they do not want them to have the insights of existing and former franchisees. Yet, these are precisely the types of information that are required in order to make an informed decision during the franchise buying process. If you are preparing to buy a franchise but have not yet performed your due diligence, here are some key questions you will want to ask before you sign: Questions for the Franchisor 1. What are my territory rights? Some franchisors offer exclusive territories, some offer protected territories, and some offer territories with no protection at all. Even “exclusive” territories will often be subject to exceptions. If your franchise agreement is not crystal clear on the definition of your territory, this is something that you will almost certainly want to have addressed before you pay your initial franchise fee. 2. How often do you make system-wide changes? Many franchisors – especially newer ones – make constant changes to their […]

Read More

If your experience as a franchisee has not gone as you hoped, you may be facing the prospect of termination. When it comes to protecting your rights as a franchisee, taking legal action prior to termination can help ensure that you have as many options as possible. So, how do you know if your franchisor is planning to terminate? While not necessarily determinative, here are five common signs that a termination notice may soon be arriving at your franchise’s door: 1. You Cannot Get in Touch with the Franchisor. If the franchisor’s representatives have suddenly become unresponsive, this may be a bad sign. When franchisors are planning to terminate a franchise, they will often (quickly) devote their resources elsewhere, and they may even have concerns about communicating in the face of potential litigation. 2. You are Being Treated Differently Than Other Franchisees. Along with lack of communication, other forms of disparate treatment can be potential warning signs of impending termination as well. For example, if other franchisees are rolling out new promotional materials, or if they are being asked to adopt updated system standards, being left out could be a sign that the franchisor is not planning to keep you in the system long-term. 3. You are Struggling with the Renewal Process While the renewal process can be a challenge even under the best of circumstances, if you are struggling to renew your franchise, there may be a reason why. The franchisor may want you out of the system, and […]

Read More

The Goldstein Law Firm is privileged to announce that firm founder Jeffrey M. Goldstein has recently been named a Global Law Expert in franchise law. Based in London, Global Law Experts (GLE) recognizes exceptional attorneys worldwide and is billed as, “[t]he premier guide to leading legal professionals throughout the world.” Recognition by Global Law Experts provides notable distinction: GLE recognizes just one attorney in each practice area per county. According to GLE’s website, it is the only organization to do so. Consideration requires a peer recommendation or approval by Global Law Experts’ research department, and all candidates must complete, “an intensive research process before being passed onto the Nominations Panel for final assessment and validation.” Each year, GLE sends its Recommendation Questionnaire to over 45,000 business leaders, advisors and in-house attorneys to solicit recommendations for the world’s leading attorneys. About Global Law Experts Global Law Experts currently recommends and endorses lawyers in 140 countries and over 50 areas of practice. Rather than focusing solely on attorneys at large international law firms, GLE also understands that the level of service provided by attorneys at smaller boutique practices can often exceed that provided by partners in Big Law. As stated by GLE: “It’s often easy to assume bigger means better, but that is not always the case with law firms; boutique practices specialise in just one legal field and as a result can often offer the same (if not better) advice on a more personal level at a typically lower hourly rate […]

Read More

The Goldstein Law Firm is pleased to announce that founding attorney Jeffrey M. Goldstein has been named among the Esteemed Lawyers of America®. This is the third time this year Mr. Goldstein and the firm have been awarded for their achievements and client service, following the firm’s recognition as Best Franchise Disputes Law Firm 2017 – USA by Acquisition International and Franchise Law Firm of the Year in the 2017 Finance Monthly Law Awards. Esteemed Lawyers of America® (ELOA) is an organization whose mission is, “to recognize the most respected lawyers in the country.” It seeks to help individuals and businesses find quality legal representation by offering a list of attorneys who are both (i) recommended by their peers, and (ii) qualified for recognition based upon their experience, commitment to client service and ethical standards. As described by the organization: “ELOA was established to honor those attorneys who are the most respected and esteemed by their peers throughout the legal community, and to help consumers identify them. . . . The best attorneys are being replaced by better marketers[,] and consumers don’t often know who the finest lawyers are anymore. By identifying the top lawyers as determined by the people who know them best – other lawyers – and educating the public as to who they are, Esteemed Lawyers of America® aims to change that.” Selection Criteria for Esteemed Lawyers of America® Membership in Esteemed Lawyers of America® is conditioned upon successful completion of a two-stage application process. The first […]

Read More