Blogs

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

  • Joint Employment in Chaos: DOL Joint Employment Rule Invalidated Hot on the heels of disappointing AB-5 news from California, a federal district court in Manhattan delivered a stinging rebuke to the Department of Labor (“DOL”), invalidating the control-based joint employment rule issued by the Department only 6 months ago. The DOL Rule adopted a control-based test of joint employment for purposes of federal employment law, in particular the Federal Labor Standards Act (“FLSA”). The Rule was strongly cross-current to states legislative actions adopting versions of the ABC joint employment test,... More
  • No Joy for Franchising in CA: AB-5 Exemption Rejected As if COVID, wildfires, and heat weren’t enough, California franchisors and franchisees suffered another gut punch when the legislature rejected a proposed franchise exemption to AB-5. When AB-5 was enacted in 2019, to the horror of the franchise industry, it appeared to create a presumption that the franchise business model created an employment relationship between franchisor and franchisee and franchisee’s employees. The Bill’s sponsors in the Assembly disclaimed any intent to interfere with positive business relationships that allow small businesses, including... More
  • FPRs in the Time of COVID-19 As if the global pandemic was not enough to cause franchisors and their attorneys heartburn, the North American Securities Administrators Association released a commentary titled “Disclosing Financial Performance Representations in the Time of COVID-19” to add another spice to the stomach turning situation. While it provides franchisors with recommendations on evaluating existing FPRs, it does not exactly provide guidance on what to do after you conduct that evaluation. Should a franchisor leave their FPR as is if there is not... More
  • Are COVID Immunity Laws Good for Franchising? (Part 2: The Counterpoint) My vote is YES! In fact, I think they are essential! I thus respectfully disagree with my partner and colleague John Gotaskie. John appropriately focuses on three stakeholders in discussing immunity legislation: business operators, employees and consumers. In my opinion, COVID immunity laws are critical to franchisors, franchisees, franchise employees, and consumers. COVID has pitched a small nuclear device into the franchise industry. Overnight everything changed. Franchisors and franchisees were faced with shut-down orders, obtaining needed inventory and supplies became problematic, some... More
  • Are COVID Immunity Laws Good for Franchising? (This post solely reflects the views of the author, and not that of Fox Rothschild or any of its other attorneys.) While I am not opposed to immunity laws generally, I am not fan of immunity that is too broad. Given that stance, I have grave concerns about the liability protections and COVID immunities being offered to business in the context of the HEALS Act and other legislation at the Federal and state level. Why? Because I am not sure they... More
  • HEROES + HEALS = ?????: COVID Relief 3.0 is a Mystery This is like watching sausage being made – it isn’t pretty. The House passed its $3 Trillion COVID rescue package (the HEROES Act) about a month ago. But the Senate’s HEALS Act is still a work in progress with an unpredictable future. And of course the internally split Senate must negotiate final legislation with the House. In the meantime, workers and businesses are forced to battle the virus, navigate challenging re-openings, and handle employment complications without much comfort as to... More
  • What Do You Know About Cryptocurrency? (Probably Not Enough) Five years ago, “Bitcoin”, “blockchain”, and “cryptocurrency” were not in the common lexicon.  Five years ago, Bitcoin, the seminal cryptocurrency, was valued at approximately $275.00 (a staggering 2,749,900% return on investment for those who obtained it for less than a penny in 2010), but very few accepted it as a method of payment.  In fact, the first person to buy a pizza with Bitcoin, a Florida programmer, had to route his transaction through England. Bitcoin (BTC) captured the public’s attention when... More
  • The Green Phase Rules Have Changed in Pennsylvania I blogged a while ago about the Green Phase of reopening in Pennsylvania, and how it did not mean “go” but something more nuanced. Something like “proceed with caution”. Today, Governor Wolf called for even more vigilance, out of concerns based on modeling done by Children’s Hospital of Philadelphia showing that the coronavirus is sweeping back into the Northeast from the South and West. Consequently, effective July 16, 2020, at 12:01 am,  Governor Wolf has issued a new order directing targeting... More
  • Key Data Privacy Considerations for Vendor Management Key takeaways from my partner, Odia Kagan’s recent presentation titled “Service Providers v. Data Processors: What Should Your Agreement Address?”  with Lexology and Exterra: As the “business,” the “buck stops with you” as it relates to liability to the individual customer respecting processing their data. Between you and your service provider/data processor, you can and should impose liability for tasks that you are engaging them to do for you. To comply with your legal obligations under the General Data Protection Regulation, California Consumer... More
  • A Summer Potpourri (Part 2): States Litigate Joint Employer Rule and NASAA speaks In Part 1 of this series, we discussed the recent actions taken by Congress regarding the PPP program as well as the efforts by the Fed. In today’s post, we dig deeper into the challenge by state Attorneys General to the Department of Labor’s final joint employment rule moved forward in the Southern District of New York, and the North American Securities Administrators Association issued guidance on financial performance representations in light of the Coronavirus. States Litigate: DOL joint employer rule... 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
  • A Closer Look: Recent NVCA Form Updates Highlight Discrimination and Harassment Key Issues Recently, we discussed generally the NVCA’s updated model legal documents on this blog. Of particular interest in the new forms is the NVCA’s attention to anti-discrimination and anti-harassment policies for emerging companies. Discrimination and harassment issues have impacted many industry-leading companies in the last year – and investors, board members and company executives all have aligned interests to ensure that the companies they are building are actively working to prevent discrimination and harassment. Two of the documents published by the NVCA... More
  • How Will GDPR Affect Cross-Border Transfers of Personal Data? Copyright: maxkabakov / 123RF Stock Photo On Fox’s Privacy Compliance & Data Security blog, associate Michelle Rosenberg provided a breakdown of the EU’s General Data Protection Regulation (GDPR), a widely discussed and substantive change to European data privacy rules going into effect on May 25, 2018. Michelle notes the global impact on companies large and small that possess, transfer and process personal data of EU individuals. She also provides an overview of the methods of compliance available to such companies, namely... More
  • Join Us April 12 for the ABA CLE Program “Finder’s Fees: Statutory Challenges for Startups” For early-stage companies in need of capital, finding potential investors can be difficult and time-consuming, especially when conditions in the capital markets are tight. For many companies, using a “finder,” an individual or entity that identifies, introduces and negotiates with potential investors, to help locate potential investors may seem to be a promising solution to this problem. However, there are risks involved in using finders, including those arising from potential violations of the SEC’s broker-dealer registration requirements. These risks are... More
  • NVCA Debuts Updated Model Legal Documents The National Venture Capital Association (NVCA) publishes model legal documents for venture capital financings, including a Certificate of Incorporation, Preferred Stock Purchase Agreement and Investors Rights Agreement. These documents enjoy wide industry acceptance as baseline agreements that parties and their counsel can tailor for each deal. They also include commentary on East and West Coast practice and bracketed alternative provisions to insert/omit depending on the deal terms. Perhaps most attractive to the parties, starting from a standardized form can decrease... More
  • If You Operate a Website, Don’t Miss the 12/31 Deadline to Update Your DMCA Notice On Fox’s Franchise Law Update blog, partner John Gotaskie recently discussed an important upcoming deadline for businesses, including emerging companies, and entrepreneurs that operate websites that accept user-generated content: If your franchise–or your franchisees–operate a website that accepts user-generated content, NOW is the time to contact the Copyright Office. Whether you realize it or not, your website probably accepts user-generated content. Examples of such content include e-commerce websites that accept product reviews, franchise-sponsored blogs that publish user comments on posted articles, and brand fandom sites... More