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

  • Taxes in Texas: Rent and Other Fees are Taxable Income In a recent opinion, the Texas State Office of Administrative Hearings (SOAH) disagreed with a Texas franchisor that claimed rent and other fees received from its franchisees were mandated by fiduciary duty to flow through to other entities and therefore not taxable revenue. The Franchise Agreement and the Franchise Disclosure Document of the franchisor, an automotive maintenance and repair business with more than 150 franchises located nationwide, detail specific costs the franchisee is required to pay the franchisor, including the... More
  • Attention Franchise Filers! Indiana Goes Paperless on January 1st More and more states are launching online portals allowing franchise systems to file initial registrations, exemptions, renewals and amendment applications electronically.    The Indiana Secretary of State, Securities Division launched the Indiana Securities Portal  exactly one year ago.  According to the Indiana Division, the implementation has been very successful and the feedback over the past year has been very positive.   As a result, the Division decided that the portal will be the sole filing mechanism for a number of filings... More
  • ‘Tis the Season to Launch that Franchise System? The new year is often a time when successful entrepreneurs with thriving business concepts start looking to expand their brand using a franchise business model.  Franchising is an excellent way to grow a business rapidly, penetrate new markets, and leverage investment from the capital infusion and energy of franchisees.    However, there are a few very important steps we always recommend to clients committed to pursuing franchising before deciding to take the plunge.  With 2020 on the horizon, let us... More
  • Another Day, Another Data Security Law: the NY SHIELD Act New York passed a cybersecurity and data breach law, effective October 23, and it expands many cybersecurity requirements to not only businesses operating in New York, but also those operating outside of the state. The SHIELD Act, as it is called, expands the scope of the current law by requiring covered entities to adopt a comprehensive data protection program and comply with additional data breach notification requirements. The SHIELD Act expands the definition of private information to include biometric information and... More
  • Happy Holidays? More challenges in franchising It’s the holiday season, but franchise lawyers may find little in recent events to celebrate. The challenges just keep on coming! Most recently, we’ve been challenged by California’s AB5 legislation and Dynamex decision, the DOJ’s brief foray into challenging “no poach” provisions and the State of Washington’s energetic embrace of that campaign. Unfortunately, recent developments are not encouraging. On the mildly positive side the DOJ’s antitrust chief testified in hearings before the House that no poach provisions can protect franchise owners’ investment... More
  • Webinar: Preserving Your Franchise System in the Face of California AB-5 So we’ve talked a bit over the last couple of weeks about California’s AB-5 and the implications for franchising. But maybe you would like to learn more? Then you’re in luck! On Monday, October 28, 2019, at 9 am PT (12 noon ET), my colleagues Tami McKnew and Nancy Yaffe will be presenting a webinar entitled “Preserving Your Franchise System in the Face of California AB-5”. The webinar will cover: Analyzing the potential risk in a wait-and-see approach Implementation of the “A-B-C... More
  • Time to Exhale . . . CAUTIOUSLY: Ninth Circuit has good news for franchisors I admit I was among the scores of franchise lawyers whose blood pressure skyrocketed with passage of California’s AB 5. If a Franchise Agreement establishes an independent contractor relationship between franchisor and franchisee, will the A-B-C test render the franchisor the employer of the franchisee? And if that’s the case, how is the franchisor NOT the employer of the franchisee’s employees? Absent a statutory exemption for franchises, AB 5 invited those dark queries. I’m exhaling now, and my blood pressure has... More
  • California’s AB-5 Implications (Part 2) As noted in our first post on this topic, California’s AB-5 codified the employment test set forth in Dynamex Operations West v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018). Although the full implications of this new law are unclear, it will like have a major impact on the franchise industry. If, as widely expected, AB-5 means that most franchisors will be considered joint employers of their franchisees employees, there will be both disadvantages and advantages . With the inevitability... More
  • California’s AB-5 Implications (Part 1) “Some day, California’s going to fall into the ocean” usually refers to the San Andreas fault. Now it may refer to AB-5, and the future of the franchise industry in California. The California legislature has now passed AB-5, and Governor Newsom has signed it into law. AB-5 codifies the Court’s decision in Dynamex Operations West v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), which horrified the franchise industry last year. Application of Dynamex’s A-B-C employment test to the franchise... More
  • Breach of Implied Covenants in PA For over 40 years, Amzi Takiedine had been a 7-Eleven franchisee when he sued his franchisor in the United States District Court for the Eastern District of Pennsylvania. The case, Azmi Takedine v. 7-Eleven, Inc. has two published decisions. The case presents an explanation of the state of the law in Pennsylvania regarding the elements of breach of contract and the implied covenant of good faith and fair dealing. Mr. Takiedine alleges that 7-Eleven was attempting to force older franchisees to... More
  • You’re Invited: Austin’s Startup Community Global Impact: Featuring SXSW and Central Texas Angel Network The American Bar Association is holding its upcoming 2018 Business Law Section Annual Meeting at the Austin Convention Center in Austin, TX, from September 13 to 15. Fox partners Emily Yukich and Matt Kittay are organizing a panel discussion entitled “Austin’s Startup Community Global Impact: Featuring SXSW and Central Texas Angel Network.” The panel will feature Claire England (Executive Director of the Central Texas Angel Network (CTAN)) and Chris Valentine (SXSW Pitch Event Producer). It will provide unique insights regarding Austin’s early... More
  • The Taxman Cometh (for Your Internet Sales) On Fox’s Franchise Law Update blog, partners John Gotaskie and Elizabeth Sigety reviewed the U.S. Supreme Court’s decision in South Dakota v. Wayfair, in which the court reversed longstanding precedent blocking states from requiring that sellers with no physical presence in their state collect and remit sales taxes on goods shipped to in-state consumers. The precedent had been a boon to the e-commerce industry. We invite you to read John and Elizabeth’s examination of the decision: The Taxman Cometh (for Your Internet Sales) ... More
  • SEC: Bitcoin Is Not Governed by Securities Laws Our colleague Kristen Howell has published an alert reporting on an important development in the cryptocurrency industry. The U.S. Securities and Exchange Commission has declared that Bitcoin, Ethereum and other coins operating on truly decentralized platforms are not securities. The agency’s reasoning was revealed in remarks by William Hinman, Director of the SEC’s Division of Corporate Finance, at the Yahoo Finance “All Markets Summit: Crypto” on June 14. Hinman explained that since the value of cryptocurrency is not based on the expectation... More
  • Four Considerations for Advisor Option Grants Startup clients often rely on independent contractors and advisors during their early stages but do not have the cash to pay them, so they turn to equity compensation. Stock options are a great incentive tool, but founders should consider the following before issuing options to advisors or independent contractors: How Much?: Most founders grant early advisors and contractors options that cover anywhere from 0.10% to 1% of the company’s fully diluted stock on a case-by-case basis. Founders should consider (i) how... More
  • Los Angeles Startups: Join Us April 24 for an HR Boot Camp! Attention all Los Angeles area emerging companies! Want to get the most out of your people and your investment? Focus on your company’s HR and corporate governance. Join Fox Rothschild Employment and Corporate attorneys Sahara Pynes and Emily Yukich as they host a free workshop for startups and emerging companies. Enjoy breakfast on us as you learn how to keep growing businesses on track, create invested teams, manage risk and cultivate top-notch culture. When:  April 24, 2018, 8:30am – 10:00am Where:  Fox’s Los Angeles Office  10250 Constellation Blvd.  Suite... More