Franchise Law Update Blog

https://franchiselaw.foxrothschild.com/

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

  • 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
  • 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
  • At the buzzer: FDA (again) extends compliance deadline for menu labeling rules Copyright: bluedarkat / 123RF Stock Photo Just four days shy of the enforcement deadline, the FDA extended the date for restaurants and similar retail food establishments to comply with its menu labeling rule. The rule was originally published on December 1, 2014 and requires certain food establishments to list calorie information on menus and menu boards, including food on display and self-service food (the “Rule”). Enforcement was delayed multiple times, and the Rule was slated to go into effect on May... More
  • Drafting Matters: When non-competes and renewal provisions collide If a franchisor waives the non-compete provision in its current franchise agreement, can it enforce a non-compete when the franchise agreement is renewed? According to a recent decision by the 9th Circuit Court of Appeals, the answer is yes, and franchisors should consider a few key lessons from the decision. Robinson, DVM v. Charter Practices International, LLC, No. 15-35356 (June 21, 2017). In Robinson, a franchisee sued its franchisor for breach of contract and other claims when the franchisor refused to... More
  • Cities of Wisconsin, BEWARE! A recent decision by the Wisconsin Supreme Court (“Court”) has potentially far-reaching consequences for municipalities and how they conduct certain business. In Benson v. City of Madison, the Court analyzed whether the Wisconsin Fair Dealership Law (“WFDL”) applied to the arrangement between the City of Madison (“City”) and multiple entities, collectively (“Golf Pros”). The City entered into contracts with Golf Pros to operate, manage and provide certain services at the golf courses owned by the City. The City paid Golf Pros a... More