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As a franchisee, you no doubt appreciate the value that a strong brand can bring to the table. In fact, brand recognition is one of the top reasons why many people choose to buy a franchise instead of starting an independent business. With approximately 27.5 million viewers having tuned in daily to watch the 2016 Rio Olympics on U.S. broadcast television and online streaming, you may be thinking about cashing in on the Olympics’ brand value in 2020. But, the question is, can you? The Olympic Trademarks Like other famous brands – including NFL, Super Bowl, NCAA, Final Four – “Olympic” is a registered trademark. The United States Olympic Committee (USOC) owns the registration with the United States Patent and Trademark Office (USPTO), and this means that using “Olympic” (or any confusingly-similar trademark) for commercial purposes requires a license from the USOC. Like other major sports organizations and other famous brand owners, the USOC makes money (lots of money) from licensing its trademark, and as a result it has been known to vigorously pursue businesses that attempt to benefit from associating themselves with the Olympics without acquiring a license. What about the Olympic rings? As you might have guessed, those are protected, too. A trademark can be a word or symbol (or a combination of both), and using the Olympic rings in your business without authorization could also very well lead to the USOC sending a cease-and-desist letter. In fact, not only are the Olympic trademarks protected by federal registrations, […]

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When comparing different franchise opportunities, there are several factors that come into play. Brand recognition, royalty rates, training, the initial investment – these are all issues that, for most prospective franchisees, are top of mind. But, there is another issue that can be just as important as these (if not more), and that also serves to differentiate certain franchisors from others. This is the issue of mandatory arbitration. While you may not be concerned about getting into a dispute with your franchisor right now, what your franchise agreement says about arbitration can be critical to understanding – and protecting – your rights should a dispute arise down the line. What is Mandatory Arbitration? Arbitration is a voluntary form of alternative dispute resolution (ADR) that is intended to provide consenting parties with an efficient and cost-effective way to avoid the burdens of full-blown litigation. In many commercial situations, it will be in both parties’ best interests to acknowledge their differences and work toward a resolution without spending unnecessary time (and money) going to court. But, if arbitration is “voluntary” and designed to save money, why are we talking about “mandatory” arbitration; and, why have we said that arbitration is not necessarily fair for franchisees? If your franchise agreement has an arbitration clause, then you are subject to mandatory arbitration. Essentially, when you signed the agreement, you “voluntarily” agreed to submit all relevant disputes to arbitration regardless of whether it is in your best interests to do so when the time actually […]

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This is Part 3 of our three-part series, Understanding Your Franchisor’s FDD. Here, we cover some of the highlights of Items 15 through 23. For our discussion of Items 1 through 14, you can read: Understanding Your Franchisor’s FDD – Part 1 (Items 1 through 7) Understanding Your Franchisor’s FDD – Part 2 (Items 8 through 14) Item 15: Obligation to Participate in the Actual Operation of the Franchise Business What You’ll Find Any restrictions the franchisor imposes regarding who can take responsibility for the day-to-day operation of the franchised business. Why You Care While some franchisors do not require their franchisees to have direct involvement in their outlets’ day-to-day operations, others do. If your franchisor requires direct, “on-premises” supervision, this is certainly something you will want to know (especially if you are looking for a multi-unit opportunity). Item 16: Restrictions on What the Franchisee May Sell What You’ll Find Any requirements to sell only approved goods or services, as well as any requirements to sell all goods or services authorized for sale at franchised outlets. Why You Care If your franchisor limits your inventory or service offerings, this is something that you will need to take into consideration when evaluating the financial potential of your franchise. Likewise, if your franchisor requires you to carry all approved products, is this going to leave you paying for inventory that just ends up going to waste? Item 17: Renewal, Termination, Transfer, and Dispute Resolution What You’ll Find A table that identifies where […]

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This is Part 2 of our three-part series, Understanding Your Franchisor’s FDD. In Part 1, we covered Items 1 through 7. Here in Part 2, we cover Items 8 through 14: Item 8: Restrictions on Sources of Products and Services What You’ll Find In Item 8, franchisors are required to disclose any obligations for franchisees to purchase or lease necessary products or services either (i) from the franchisor, (ii) from a designated or approved supplier, or (iii) according to mandatory specifications. This includes: Supplies, fixtures and equipment Inventory Computer hardware or software (including POS systems) Real estate Any “comparable items related to establishing or operating the franchised business” Why You Care Purchasing controls can often mean higher purchasing prices for franchisees. When a franchisor negotiates a volume rebate with a supplier, this does not necessarily mean that savings get passed on to the franchisees. In fact, instead it can simply mean that franchisees lose the ability to shop for competitive pricing. Item 9: Franchisee’s Obligations What You’ll Find Item 9 is comprised of a cross-reference table that identifies where you can find various pieces of information (like site selection and pre-opening requirements) in the Franchise Disclosure Document (FDD) and the franchisor’s standard franchise agreement. Why You Care If you are not familiar with reviewing FDDs and franchise agreements (and most prospective franchisees aren’t), you can use the Item 9 table to get an overview of the key legal and business terms that will apply if you decide to move forward […]

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Pursuant to federal regulations and franchise laws in various states around the country, before selling a franchise, the franchisor must provide the potential buyer with a Franchise Disclosure Document (or “FDD”). Each franchisor’s FDD must closely follow a format that includes: A Cover Page A table of contents Specific information broken out into 23 “Items” Exhibits (including a copy of the franchisor’s standard franchise agreement) While understanding your franchise agreement needs to be a top priority, it is also important to critically assess the information contained in Items 1 through 23. In a series of three articles, we will summarize what you can (or should) expect to see when you open up your franchisor’s FDD. Item 1: The Franchisor and Any Parents, Predecessors and Affiliates What You’ll Find Along with general business information (like the franchisor’s name and address), Item 1 must contain: a description of the franchise business, the general market for the franchise system’s products or services, disclosures regarding the franchisor’s franchising history and whether it operates any company-owned outlets, and information about competition and industry-specific laws. Why You Care While Item 1 disclosures tend to be pretty general, prospective franchisees can uncover some key information in Item 1. For example, if the franchisor has a prior history in franchising (especially an unsuccessful one) or if the industry has unique legal requirements, this is certainly something you will want to know going into your franchise opportunity. Item 2: Business Experience What You’ll Find A five-year employment and business […]

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The franchise industry is booming. According to the International Franchise Association’s Franchise Business Economic Outlook for 2016, the number of franchised outlets, number of franchise employees, and gross domestic product (GDP) from franchised businesses all increased more than expected during 2015. Last year’s growth figures exceeded those from 2014, and the International Franchise Association expects to see similar growth in 2016. For franchisees, the franchise model has its benefits. However, these benefits come with strict limitations as well. So, if you want to own your own business, is a franchise worth it? Benefits of Buying a Franchise Talk to any franchise consultant, and you will hear pretty much the same story about why franchising is a smart alternative to building an independent business from the ground up. Generally speaking, the hallmark benefits of buying a franchise include: Brand Recognition – Customers who want to know what to expect rely heavily on brand recognition (consciously or not) in deciding where to spend their money. Unlike starting a business from scratch, with a franchise you have instant credibility. Proven System – Franchisors offer proven systems, covering everything from site selection and trade dress to point-of-sale technology and back-end financial management. When you buy a franchise, you are buying the right to benefit from the franchisor’s background and expertise. Franchisor Support – Franchisors have an interest in making sure their franchisees are successful. Successful outlets mean more royalties and better selling points for new prospective franchisees. Of course, some franchise systems offer more […]

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As a franchisee, there are few things worse than coming to the realization that you may need to sue your franchisor. Unfortunately, for many franchisees, this is reality, and taking legal action is the only way to protect their investment and their legal rights. If you are at the point of considering franchise litigation, this article provides an overview of potential causes of action that franchisees can assert against their franchisors. To find out what claims you may have available, we encourage you to contact us immediately for a free consultation. Common Claims in Franchise Litigation Franchise Disclosure Violations Under federal law and the laws of various states around the country, franchisors owe a duty to provide timely and accurate disclosures to potential franchisees. These disclosures must be made in the form of a Franchise Disclosure Document (FDD), which, depending on the state where you live, may need to be registered before the franchisor can begin selling franchises. Some common forms of franchise disclosure violations include: Your franchisor failed to provide you with an up-to-date FDD Your franchisor sold you a franchise too soon after providing you with its FDD Your franchisor included misrepresentations or exaggerations in its FDD Your franchisor underestimated the initial investment to open your franchise in Item 7 of the FDD Your franchisor provided an inaccurate or unsubstantiated “financial performance representation” Breaches of the Franchise Agreement While most franchise agreements are fairly limited in terms of establishing affirmative obligations for the franchisor, there are still typically […]

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If your aspirations as a franchisee extend beyond opening a single location, you potentially have a few different options available. Franchisors often favor selling new territories to well-qualified and trusted franchisees, and as a result over the years the industry has developed a number of “standard” methods for providing expansion options to franchisees seeking multi-unit opportunities. These methods include: Area Development Agreements Rights of First Refusal Options for Additional Territories Methods for Securing Multi-Unit Franchise Development Rights 1. Area Development Agreements When you sign an Area Development Agreement, you receive the right to open multiple outlets. However, you also have the obligation to open these outlets – most likely on a very tight schedule or within a very limited period of time. As a result, when considering an Area Development Agreement, it is critical to thoroughly assess both the market conditions and your financial capacity to ensure that you are not taking on an unviable business or biting off more than you can chew. Importantly, when you enter into an Area Development Agreement, you will still be required to sign a Franchise Agreement for each individual outlet. As an area developer, carefully negotiating both the Area Development Agreement and the individual Franchise Agreements is critical to protecting your multi-unit development and individual franchise rights. Remember, franchisors want as many protections as possible, and it is very possible that your franchisor’s standard agreements allow for termination of all of your rights if you fail to meet your development schedule or if […]

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When evaluating a new franchise opportunity, there are plenty of considerations to keep in mind. What is the best location? Will you need to hire employees? If so, how can you find people you can trust? How and when will you roll out your initial advertising campaign? Amidst the excitement and practicalities involved in opening a franchised business, it is easy to want to jump ahead. Unfortunately, for some franchisees, this means overlooking a key step: hiring an experienced franchise attorney to review and help you understand the franchise agreement. The Importance of Negotiating with Your Franchisor When prospective franchisees decide not to hire an attorney, there are usually a couple of reasons why. First, they assume that the franchise agreement is non-negotiable. Or, even if it is negotiable, they do not want to “get off on the wrong foot” by getting into legal negotiations with their new franchisor. Second, they assume that all franchise agreements are the same. They are set on getting into the world of franchising, and they take for granted that submitting to the terms of a franchisor-friendly contract is just part of the process. However, the truth of the matter is that franchisees can (and should) negotiate their franchise agreements, and franchise agreement terms can vary widely from one system to the next. Quality franchisors should be open to – and even expect – reasonable negotiations, and in many cases negotiations will simply focus on clarifying ambiguities and bringing the terms of the agreement up […]

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Immediate Opening For Third Year Law Student or Recent Graduate Small litigation boutique in Washington, DC with national practice seeks Third Year Law Student for part-time work. This will involve litigation assignments including pleadings preparation. Practice is national, and contact with partner and clients is almost exclusively by internet, phone and email. Hourly rates are negotiable based on experience.  The estimated hourly hours per week are 10-15. A commitment through the end of the school year is required. Interested in Applying? Interested candidates should be ready to begin work immediately, and express interest by sending a copy via Email of a letter of interest, your resume and two writing samples to: Jeffrey Goldstein; Goldstein Law Firm 1629 K ST. N.W. Suite 300 Washington D.C., 20006 jgoldstein@goldlawgroup.com goldlawgroup.com 202-293-3947 About The Goldstein Law Firm The Goldstein Law Firm is one of only four national franchise law firms in the country that represents exclusively franchisees and dealers. Jeff Goldstein’s practice covers prolific and myriad commercial complex litigation matters, and Jeff is regularly sought out by franchisees and dealers from foreign countries (e.g., UAE, South America, United Kingdom) to represent them in disputes with United States franchisors and suppliers. Under the formation, growth and supervision of Jeff Goldstein, the law firm is recognized as a top tier franchise law firm for franchisees and dealers.

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