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

  • 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
  • How Do You Determine Your Franchise System’s Technology Fee? In my recent experience, most franchise start-ups and emerging systems typically charge a technology fee or, at a minimum, reserve the right to charge a technology fee in the future.   These fees are easily justifiable.  Franchisors are routinely creating, developing, managing, and upgrading software programs, websites, phone systems, online platforms and similar technology solutions used by the system franchisees to effectively run their businesses. As detailed in a recent issue of Franchising World by Keith Gerson, FranConnect undertook an interesting review... More
  • Negotiating Supplier and Distributor Agreements (Reports from the IFA Legal) The first step in creating or renegotiating a supply chain is understanding its component parts, and the roles each part plays: Producers, Manufacturers, Distributors, Retailers, and Consumers. These roles are not exclusive. For instance, the producer of a raw good, such as milk or software code, may also be the manufacturer of the finished good or service (in either case or collectively, a “supplier”), and manufacturers often handle distribution themselves, especially if the franchisor is the manufacturer. A franchisor could... More
  • No-Poach and Antitrust, Part Deux (Or, is the risk worth it?) In a recent post, I expressed the view that no-poach clauses in franchise agreements are unlikely to violate the antitrust laws. Recent activity, however, has given me a “maybe yes, maybe no” on my prediction. First, two recent rulings offer differing views on the issue of the appropriate standard to apply to the antitrust analysis. The possible standards of review, from the most lenient to the most demanding, include per se (automatically illegal), quick look, and rule of reason. On August 7,... More
  • Best and Worst Franchise Rankings: Understanding the Methodology The 2019 “Best and Worst Franchise” rankings have been published by Forbes. The franchise analytics firm, FRANdata, was commissioned to apply a methodology that ranks franchise brands on “health and appeal,” from the perspective of a prospective franchisee. This is the fifth report FRANdata has produced for Forbes, this time using information spanning the five-year period between 2013 and 2017. While the rankings are interesting, the methodology used by FRANdata must also be considered because the interests of franchisees buying... More
  • Online Reviews – Best Practices for Dealing with Yelp from Yelp! The Pennsylvania Restaurant and Lodging Association provides many benefits to its hospitality industry members.  One of those benefits is access to its interesting and useful webinar series.  This month’s webinar “Five Star State of Mind: Handling Online Reviews” was presented by Ali Schwartz of Yelp.   Unlike Yelp’s sales team, Ali is a member of Yelp’s business outreach team who focused on educating business owners on the free tools offered by Yelp that do not require any spending. Yelp tests its reviews... More
  • No-Poach Provision: The Latest Cause of Worry to Franchise Systems The recent antitrust attacks on no-poach clauses encourage insomnia among franchise lawyers. But is the attack serious or just a flash in the pan, soon to be extinguished? The insomnia began in the tech industry, where front-line players with huge market shares agreed not to poach each other’s employees. No-poach agreements among dominant market players, the Department of Justice opined, would have a significant depressive effect on employee salaries. The DOJ asserted that such agreements were per se illegal under the... More
  • Takeaways from the IFA Philadelphia International Franchise Association Summer Event at Rita’s Franchise Company The Philadelphia Chapter of the International Franchise Association’s Women’s Franchise Network hosted its annual summer meeting this past week.   For those of you who do not know, the local chapters of the IFA WFN’s is a local community designed to create, promote and inspire a network of female franchise business professionals dedicated to strengthening the success of women in the franchise industry.  Hosted by Rita’s Franchise Company at their company headquarters and training facility in the Philadelphia suburb of Trevose, more... More
  • Navigating National Accounts in Service Franchise Systems (Reports from the IFA Legal) Approximately one third of all franchise systems in the U.S. are service franchises. Services franchises can offer business services (e.g. insurance, printing), services related to residential and commercial real estate and fixtures (e.g. landscaping, plumbing), or personal and consumer services (e.g. education, health care). As with all goods-focused franchise systems, the franchisee territory is often a  primary source of disputes between franchisees and franchisors. Service franchises, however, often contain a unique, territory-related feature: national account programs. Service franchise systems use national account... More
  • Dinner on Demand: Franchising and Meal Prep Delivery A meal kit contains the ingredients necessary to prepare a meal, and many are intended to be balanced and healthy. Meal kits are being marketed for all occasions to provide freshly prepared meal options. Kits answer not only the question of “What is for dinner,” but also, “Do I have everything I need?” These kits also provide a solution to those who want to eat healthy, allowing them to customize their order. The growth rate is staggering. From 2018 to 2019, the... 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