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Emerging Companies Insider

The Emerging Companies Insider blog focuses on recent and developing areas of the law affecting startup and emerging growth companies and their investors, including choice of entity, shareholders’ agreements, issuance of equity to employees, preparing for and executing a capital raise, exit strategies and the JOBS Act and its impact on how companies can and should raise capital from investors.

Franchise Law Update

For those with an interest in the world of franchising, the Franchise Law Update blog will become a regular stop for you. Our bloggers discuss not only the regulatory aspects of franchising, but also diverse topics such as business finance, employment, litigation and the protection of intellectual property including trademarks and copyrights. We understand that while franchising has its unique aspects, franchise businesses confront the same opportunities, changes and challenges as any other business.

Recent Blog Posts

  • Tax Implications of Your Stock Options Ethan Zook and Jacob Oksman write: Attracting and retaining high-performing employees is critical to the success of any emerging company. A key ingredient to securing the right talent base is an attractive and aligned remuneration plan. Most emerging companies will structure their remuneration plan leveraging three key elements: a competitive base salary, a short-term bonus plan, and a long-term incentive plan (LTI) that typically comes in the form of a stock option plan. The base salary and bonus plan are typically structured... More
  • Court: Philadelphia Beverage Tax Is Constitutional Updating our blog postss of March 29, July 7 and December 26 of 2016, an appeal to the Commonwealth Court of Pennsylvania seeking to invalidate the Philadelphia Beverage Tax on Sugar Sweetened Beverages (the “PBT”) failed.  In a majority opinion filed on June 14, 2017, Judge Michael Wojcik, joined by 5 of the 7 judges hearing the appeal, affirmed the judgement of the Philadelphia County Court of Common Pleas that the tax is constitutional and consequently agreed that an injunction against... More
  • Is Everything “Settled” in Your Settlement Agreement? Not Quite! A recent case involving the Whataburger franchise system reminds franchisors of the importance of the use of iron-clad language when granting future development rights. In Whataburger, Inc. et. al. (“Whataburger”) v. Whataburger of Alice, Ltd. (“WOA”), the court was tasked with interpreting the language of a settlement agreement (“Settlement Agreement”) to determine whether WOA had the unfettered right to open new restaurants. Copyright: jagcz / 123RF Stock Photo As background, WOA had previously operated 28 franchised restaurants and sold them to Whataburger... More
  • Canada’s Horrible Anti-Spam Law Almost Got Even More Horrible As many Canadians, as well as foreign companies doing business in Canada, now know, the cornerstone of Canada’s Anti-Spam Law (CASL) is a general prohibition against sending any “commercial electronic message” without the prior express or implied consent of the recipient. A “commercial electronic message ” or “CEM” is broadly understood as any electronic message that encourages participation in a commercial activity. That’s a big deal, because one of the fundamental elements of CASL that makes it so onerous is... More
  • Trump Administration Delays Regulations To Fast-Track Startups The Trump administration recently announced it is delaying – and likely rescinding – the Obama-era International Entrepreneur Rule (the “Rule”). The Rule was slated to go into effect on July 17, 2017. It would have made it easier for foreign entrepreneurs to establish startup companies in the U.S. We blogged in detail on the final Rule when it was published in early 2017. Now the Rule’s effective date has been delayed until March 14, 2018; however, implementation seems highly unlikely: the... More
  • Philadelphia Ranked Fifth in List of U.S. Life Science Clusters A study of interest for those in the Philadelphia region has recently been released. Copyright: sepavo / 123RF Stock Photo Rising two spots from last year, Philadelphia has been ranked fifth on the list of life science clusters in the United States recently published by professional services and research firm JLL.  Following Boston, San Francisco, San Diego and Raleigh-Durham, Philadelphia was cited as the leader in the “Breakout Cluster”, which are regions “making strides in life sciences through new development and a growing... More
  • Article: 21st Century Cures Act Implementation Fox Partner Jean Frydman recently wrote an article on the 21st Century Cures Act for the Food and Drug Law Institute’s member magazine Update. In it, Jean describes the significant potential of the Act to transform the life sciences sector.  She outlines the key provisions of the law and how their implementation during the next five years will impact standards and practices within the industry. These provisions include the use of Real World Evidence (RWE) in regulatory decision-making, patient-focused drug development, patient... More
  • Important Changes to the Illinois LLC Act Changes to the Illinois Limited Liability Company Act that took effect on July 1, 2017 may impact either your current Illinois LLCs or your future ventures. The changes generally conformed Illinois law more closely to a model law for limited liability companies drafted by the National Conference of Commissioners on Uniform State Laws that has already been adopted by 15 states and the District of Columbia. Copyright: tashatuvango / 123RF Stock Photo   Among the changes to the Illinois law are: Default Member Management  An... More
  • Janitorial services franchisor cleans up on joint employer claim Janitorial services franchisor Jan-Pro Franchising International, Inc. (“Jan-Pro”) is not the employer of its unit franchisees, according to a recent California federal court decision. Roman v. Jan-Pro Franchising Int’l, Inc., No. C 16-05961 WHA (N.D. Cal. May 24, 2017). The plaintiff franchisees failed to show that Jan-Pro exercised sufficient control over their day-to-day employment activities. Copyright: stocksolutions / 123RF Stock Photo What makes this case unique is that Jan-Pro operates a three-tiered franchising structure, often called a subfranchise arrangement. Under this arrangement,... More
  • Incentive Plans for Emerging Companies An incentive plan is a tool used to motivate and reward employees to grow a business and exceed goals. A common form of an incentive plan for startups is an equity incentive plan. An equity incentive plan rewards key employees with equity, which is ownership in a company. Equity can be a company’s stock if it is a corporation or its membership interest if it is a limited liability company. For startups, equity incentive plans can be a great way... More
  • DOL Opinion Letters are Back As a surprising new gift from the Trump Administration, the Department of Labor has decided that it will again start issuing opinion letters on thorny questions about the FMLA and the FLSA and other laws enforced by the Wage and Hour Division. For reasons that were never quite clear, the Obama Administration had done away with the practice; instead preferring to sporadically issue administrator interpretations. For employers, opinion letters are often more helpful as you can tell the DOL your specific facts... More
  • Ransomware: How Can You Fight Back? Ransomware is back in the news. Yet again, massive and not-so-massive corporate enterprises find themselves at risk of having their computer systems and records held hostage to internet raiders. And, in an added twist, this time systems are not necessarily unlocked even after the ransom is paid. Copyright: tonsnoei / 123RF Stock Photo What can you do? The key is advance preventative measures. Over at Fox Rothschild’s Privacy Compliance and Data Security blog, we follow these issues regularly. There, we have noted... More
  • Is Your Agreement to Arbitrate Valid? Many franchisors employ arbitration as its preferred method of dispute resolution.  Generally, courts view arbitration agreements favorably. An agreement to arbitrate waives the fundamental right to have a court decide the merit of their disputes. As such, valid, enforceable arbitration agreements are required to waive this essential right. Two recent decisions highlight the importance of ensuring that a valid agreement to arbitrate exists between the parties. Copyright: designer491 / 123RF Stock Photo Theo’s Pizza, LLC v. Integrity Brands, LLC In this case, the franchisee... More
  • Not a Minor Issue! FTC updates COPPA Compliance Plan This week, the Federal Trade Commission (FTC) updated its guidance for businesses on complying with the Children’s Online Privacy Protection Rule (COPPA) .   If a website operator or operator of online services collects personal information from kids under 13, then the business must comply with COPPA.   The definition of “personal information” is broad and includes a child’s name, voice, address, photo, email address or telephone number.   COPPA encompasses a wide range of activities, including mobile apps and toys or other products connected to... More
  • Fiduciary Duties After Pennsylvania’s Act 170 Ethan Zook writes: As was alluded to in a prior blog post, one of the major changes that has been enacted through Pennsylvania’s Act 170 is the ability, through the operating agreement, to contractually vary fiduciary duties of members and managers in Pennsylvania limited liability companies. What Fiduciary Duties? Copyright: somartin / 123RF Stock Photo There are two major fiduciary duties to be aware of: the duty of care and the duty of loyalty. The fiduciary duty of loyalty is comprised of five subsections which... More