Franchise Law Update Blog

Tami writes frequently for the firm's Franchise Law Update blog, which highlights 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.

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
  • 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
  • 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
  • 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
  • A Summer Potpourri (Part 1): Congress Legislates and the Fed Weighs In Amidst the continuing pandemic, summer brings faint hope that someday things might return to business as usual. For the franchise industry, recent events offer a hint of normality. In Part 1 of this early summer round-up, we take a look at the actions taken by Congress to legislate some flexibility into Payroll Protection Plan loans and how the Federal Reserve expanded its Main Street lending programs to reach small businesses. Congress Legislates: The PPP Flexibility Act             Facing abrupt revenue interruption due... More
  • Washington v. Washington: State of No-Poach The Department of Justice backed off no-poach challenges in franchise agreements in 2019, but the state doubled down. The result? Washington state challenged a raft of no-poach/no-hire provisions in 225 franchise systems, resulting in agreements requiring franchisors to agree not to enforce the offending provisions not just in Washington but nationwide. On April 28, 2020, Washington AAG Rao declared victory, characterizing the DOJ’s approach as “somewhat misguided.” Does Washington State’s victory celebration mean that other franchisors needn’t worry about enforcing such... More
  • THE BALLAD OF THE HARE AND THE TORTOISE: FASB delays ASC 606 Surprise! On April 8th, FASB delayed for one year the implementation of the new ASC 606 revenue recognition standards for private companies,[1] citing the coronavirus pandemic. In addition to delaying implementation, FASB indicated it would investigate “how to reduce implementation costs relating to applying Topic 606 to initial franchise fees.” While the connection between implementation of the amended standard and the pandemic may be inexplicable, FASB’s reconsideration of ASC 606 is welcome news to franchisors. The delay does create a bit... More
  • ACT NOW!!! New PPP and EIDL funds will disappear FAST Yesterday, legislation adding an additional $310 Billion to the Payroll Protection Program (PPP) and $50 Billion to the Economic Injury Disaster Loan (EIDL) funds  passed the Senate, and passage in the House is imminent. But the new funds will disappear quickly! The original massive PPP and EIDL appropriations evaporated in less than two weeks. Although those funds were designed to keep small businesses alive in the face of the COVID-19 pandemic, publicly traded companies and those with strong lender relationships were... More
  • A Rough Roll-Out for Payroll Protection Loans Need and speed can be a dangerous combination. Just ask Peter “Maverick” Mitchell. That’s a lesson that lenders and borrowers are discovering with CARES Act Payroll Protection Program (PPP) loans. The CARES Act’s PPP provisions promise accessible liquidity support for franchises and small businesses. Indeed, Treasury Secretary Mnuchin said PPP or Emergency Income Disaster Loans and Grants might be paid the day after applying. The early reality is proving to be far more challenging. The overarching issue is the urgent need... More