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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

  • Did You Hear? Watch Out For Ohio’s BOPPA! A recent decision in the United States District Court of Arizona (“Court”) could have far-reaching consequences to many franchisors based on the broad-sweeping principles the Court used in its reasoning. In Zounds Hearing Franchising, LLC et. al. v. Bower et. al., the Court answered the question of whether the Ohio Business Opportunity Purchasers Protection Act (BOPPA) trumps a choice of law and venue provision that provides for the application of law other than the State of Ohio. Here, four franchisees filed... More
  • Drafting Matters: Do your non-competes bind the correct parties? A federal court in Colorado recently upheld a franchisor’s non-competition provision despite that state’s strong public policy against non-competes. The franchisor prevailed due to its thoughtful contract drafting and ability to effectively communicate the unique nature of franchising to the court. In-home care franchisor Homewatch International, Inc. and its franchisee, Prominent Home Care, Inc., signed a franchise agreement that terminated on June 30, 2016. The next day, Prominent’s sole shareholder and officer (the “Defendant”), started a competing company. Homewatch sued the... More
  • Happy Thanksgiving! From our Family to Yours, all of the Franchise and Distribution attorneys of Fox Rothschild send to you the warmest Thanksgiving wishes. We are most thankful for our franchise friends and clients, and wish them every continued success. The post Happy Thanksgiving! appeared first on Franchise Law Update.... More
  • FDA releases new guidance on menu labeling rule   Copyright: yarruta / 123RF Stock Photo The Trump administration is moving forward with an Obama-era initiative requiring certain food establishments to list calorie information on menus and menu boards, including food on display and self-service food. The FDA recently released new draft recommendations to help affected businesses comply with the menu labeling rule. The rule implements the nutrition labeling provisions of the Patient Protection and Affordable Care Act of 2010, which are intended to give consumers direct, point-of-purchase access to nutritional information, including... More
  • Successor Liability? Double-Check Those Assets! The intersection of franchise law and general corporate law is extensive. A recent decision in the Michigan Court of Appeals (Court) highlights the importance of thoroughly understanding and considering the ramifications of transactions involving both spheres of law. In Retail Works Funding LLC v. Tubby’s Sub Shops Inc. and JB Development LLC, the plaintiff (Plaintiff) brought suit against each defendant (Tubby’s and JBD or collectively, the Defendants) after JBD purchased the rights and goodwill to the service mark JUST BAKED (Mark)... More
  • Despite Legal Uncertainties, Initial Coin Offerings (ICOs) Attract Startup Attention Over $1.5 billion has been raised by token offerings – also known as initial coin offerings or ICOs – so far in 2017. Not surprisingly, many startups are eager to capitalize on this possible funding source. Although ICOs can be a useful method of raising capital, a number of legal issues must be considered in structuring and completing an ICO. One such issue is whether the tokens being offered in an ICO will be considered securities. A report issued by the... More
  • M&A Market Outlook Strong for Emerging and Growth Stage Companies In a recent study polling more than 400 business owners, founders and leaders across the U.S., Harris Williams reports that despite mixed positions on the nation’s general political climate, interest in M&A among middle market private companies continues to rise. Copyright: bas121 / 123RF Stock Photo Key findings included: 95% of survey respondents are interested in M&A over the next three years – up from 81% in 2015 65% said they were interested in acquiring other companies 52% said they would consider selling 36% would consider... More
  • Happy Halloween! Is Your Franchise System Insured for Social Engineering Fraud Claims? As cyber scams become more widespread and sophisticated, social engineering fraud is quickly turning into one of the most popular way for a thief to rip-off a company using computers.  Every franchise system should be asking itself and its franchisees “do we/you have insurance coverage to protect against these losses?” In most cases, the answer is No! 43609592 – online scammer reaching to steal money out of a pocket of a naive internet user, vector illustration “Social Engineering Fraud” are schemes that mislead... More
  • Save Local Business Act moves one step closer to limiting joint employer liability The U.S. House Committee on Education and the Workforce recently approved the “Save Local Business Act” (HR 3441 – Byrne).  If enacted, the Act would limit joint employer liability by reversing the rule announced by the NLRB in Browning-Ferris Industries, 362 NLRB No. 186.  The Browning-Ferris decision departed from 30 years of precedent by issuing a new joint employer test with significant ramifications for the franchise model.  Under Browning-Ferris, a company (e.g., a franchisor) that has “indirect” or “potential” control over the... More
  • No Tip of the Hat to DOL Guidance A recent decision by the Ninth Circuit Court of Appeals (Court) in Marsh v. J. Alexander’s throws a wrench into the equation with respect to the guidance on the tip-credit provision of the Fair Labor Standards Act (FLSA) promulgated by the Department of Labor (DOL). 25151637 – tip jar with british currency and label saying thank you The nine consolidated cases at issue were brought by servers/bartenders against their former employers. Each employee claimed that his respective employer violated the tip-credit provision... More
  • Implied Covenant of Good Faith Does Not Trump Express Terms The U.S. Court of Appeals for the Third Circuit upheld a New Jersey district court’s decision that 7-Eleven did not violate the New Jersey Franchise Practices Act (NJFPA) after the franchisor terminated a New Jersey multi-unit franchisee for breaching its franchise agreements.   This is a win for 7-Eleven as well as any franchise system operating in New Jersey as the case affirms that the implied covenant of good faith and fair dealing cannot override an express term in a contract. Copyright: photoncatcher / 123RF Stock Photo Problems with... More
  • Federal Court Concludes Franchisor Was NOT Joint Employer Another case has been decided adding to the back and forth in the legal world on the issues of a joint employer relationship of a franchisor and its franchisee and vicarious liability and agency between a franchisor and franchisee. In Harris v. Midas, (2017 WL 3440693 (W.D. Pa. Aug. 10 2017)) a federal court in Pennsylvania dismissed an auto repair service franchisor from a sexual harassment case brought by a former employee of one of its franchisees.  The plaintiff alleged multiple... More
  • ABA Panel Tackles Venture Investing in Cannabis Companies Venture capital is playing a growing role in the country’s emerging legal cannabis industry. Attorneys Emily J. Yukich and Matthew R. Kittay of Fox Rothschild’s Emerging Companies & Venture Capital Practice will conduct a panel discussion with industry insiders during the American Bar Association Business Law Section’s annual meeting in Chicago. The Angel Venture Capital Subcommittee, which Yukich and Kittay co-chair, will present an in-depth 360-degree examination of venture capital investing in cannabis companies, featuring: Panelists: Jeremy Unruh, general counsel and director of... More
  • The Difference Between Venture Capital and Private Equity (And How Star Wars and Star Trek Will Help You Remember Them). Quick quiz: If your startup is seeking investors, will you have more success with private equity or venture capital firms? How about when you’re looking to sell that company? The answers are (1) venture capital and (2) private equity.  If you weren’t sure, you’re not alone; the terms are often confused or used interchangeably.  However, PE and VC firms generally have very different investment strategies.  Understanding the distinctions may help save time and money and…perhaps…save face (i.e., not everyone will judge you for... More
  • Why Your Company Name Matters –The Right Name Accelerates Growth and Saves You Marketing Costs When Every Dollar Matters An abbreviated version of this article will appear in the American Bar Association’s Business Law Today, Fall 2017 Edition. Is your startup brand so strong that consumers tattoo the logo on their arm? Or so hard to pronounce that investors, vendors and customers are disinclined to do business with you? According to a study published in the peer-reviewed academic journal Venture Capital, your company name matters even more than you think.  The study, entitled “The Effect of Company Name Fluency on Venture... More