Hirzel Dreyfuss & Dempsey, PLLC
NEWS AND INFORMATION
HB352 Seeks to Save The American Dream For Franchisee Small Business Owners
Florida needs similar legal protections for Franchisees…
“The Bush family spent nearly three decades building a successful small business in rural Elmore County. Twenty-six years ago, Darrel Bush’s parents purchased a Huddle House franchise and began the grueling task of opening a new restaurant. The restaurant grew into a success and, as they became ready, the next generation of the Bush family joined the business. Two generations of a single family were living the American Dream until the Huddle House corporation decided they wanted the profits that the Bush’s were making for themselves – cut out the small business owners that built the Huddle House name in Wetumpka.
Once the corporation had their eyes set on the Bush’s business, they used corporate bullying to drive the Bush’s out of business so that the corporation could build a company-owned Huddle House just a mile down the road. Alabama law had no protections for the Bush family and they lost the dream they had devoted their lives to achieving.
Unfortunately, the Bush family is not alone. Time after time, Alabama’s small business owners find themselves at the mercy of large out of state corporations due to our state’s weak franchisee protection laws.
Under current statute, the out of state franchisors hold all of the cards while Alabama small business owners are largely powerless to defend themselves. It is not uncommon for these franchisors to come back year after year and demand changes to franchise contracts. If the franchisees balk at agreeing to the changes, their businesses are threatened. They are often forced to purchase products at far above the fair market value, forced to make investments of their profits into systems and programs that benefit the corporation, not their small business. If a location gets too successful, they are at risk of being shut down so that a corporate owned store can open up down the street and usurp the profits for the corporation. Often, franchise owners are told that they can’t leave their businesses to their children.
Many Alabama franchisees lives in a constant state of fear.”
Read More at https://yellowhammernews.com/hb352-seeks-to-save-the-american-dream-for-alabama-small-business-owners/
Never Buy a Franchise Without Researching These Available Sources of Information
Finding the right franchise opportunity involves research and effort. Additionally, prospective franchisees should consult with a franchise attorney to protect their interests and to avoid the prospect of signing franchise agreements that may be drafted against the interests of the franchisee. Hirzel Dreyfuss & Dempsey can protect franchisees during the initial franchise acquisition process and can also help if problems emerge later in the franchisor-franchisee relationship.
The following excerpt is from Mark Siebert’s book The Franchisee Handbook: Everything You Need to Know About Buying a Franchise.
While the internet is an extremely valuable resource in your hunt for potential franchises, let’s discuss some of your other options for information gathering.
Franchise brokers
Another resource that can help guide you through the process of buying a franchise is a franchise broker. Brokers, who often call themselves “franchise consultants,” can be a valuable tool in helping you assess your options.
Unlike a franchise salesperson, a broker isn’t limited to a single franchise concept and may represent a hundred or more franchisors. In the best networks, the broker is trained to help a prospective franchisee narrow their choices to a handful of opportunities for which they are well-suited.
Ultimately, brokers are a great resource that can provide genuine value, but they aren’t the completely unbiased buyer’s advocates some would have you believe. So while brokers are a resource you should certainly consider, ultimately you should make certain they’ve steered you in the right direction.
Trade and Industry Shows
Another great place to get information on franchises you might want to consider is at franchise trade shows and, if you’re looking in a specific field, industry shows. Franchise shows in particular will give you an opportunity to speak with several hundred franchisors from a variety of industries in just a couple of days.
These shows have other advantages as well. Generally speaking, they offer seminars on all aspects of franchising, giving you a chance to learn before you buy. These seminars feature topics like industry trends, understanding contract provisions, veterans’ franchise programs, financing, and overall success as a franchisee and are often worth attending.
Keep in mind that these shows may not provide a representative sample of the franchise marketplace. The exhibitors tend to skew slightly toward younger franchises and ones with lower investment levels.
International Franchise Association
The website of the International Franchise Association contains a wealth of information on franchising. In addition to allowing you to search select franchisors, it provides information on industry suppliers in areas such as finance, insurance, veterans’ programs, minority programs, and the franchise buying process.
Read more at https://www.entrepreneur.com/article/323372
Legal Challenges to "No-Poach" Provisions in Franchise Agreements
Franchisees may find themselves limited in their ability to find talented personnel due to “No-Poach” provisions. Additionally, without legal guidance, franchisees may find themselves in breach of their franchise agreements, and subject to potential litigation as a result. Hirzel Dreyfuss & Dempsey can help franchisees navigate the dangers associated with franchise agreement “No-Poach” provisions.
Story: Legal Challenges to No-Poach Provisions in Franchise Agreements
As a general matter, agreements between franchisors and franchisees are typically subject to the rule of reason because they can be viewed as vertical restraints that may produce procompetitive benefits. For example, restrictions in franchise agreements on the items franchisees can sell, where they can sell them, and how they can advertise ensure that franchisees are selling a uniform product and enhancing a unified brand, which encourages interbrand competition. Because franchise no-poach agreements raise questions about competition for labor, rather than competition for consumers, the proper way to characterize the nature of labor-market restraints within a franchise business is relatively uncharted territory of antitrust law.
Women in Franchising (Not Just For Men Anymore)...
Excellent news about the expanding role women play in franchising…
The franchise business model is no longer a man's game. More and more women are finding a business home in the franchise world - and liking it very much, thank you!
Research and statistics confirm that women have been steadily rising in the ranks of business and franchise operators over the past three decades. According to the 2013 State of Women-Owned Businesses Report (commissioned by American Express OPEN):
More than 8.6 million women-owned businesses generate over $1.3 trillion in revenues and employ nearly 7.8 million people in the United States.
Between 1997 and 2013 the number of businesses in the United States increased by 41 percent while the number of women-owned businesses increased by 59 percent, 1.5 times the national average.
Women-owned businesses exceed overall sector growth in eight of the 13 most populous industries.
Women-owned businesses are highly concentrated in: health care and social assistance, educational services, other services, and administrative support and waste management services.
Among these female entrepreneurs are numerous women who have found a professional home in the franchise industry where 20.5 percent of franchised businesses are owned by women. Furthermore, an additional 24.4 percent of franchised businesses are male & female co-owned.
So just what is it about women and franchising that has spurred this marked growth? Well, skills, interests, and personality traits, among other things, seem to be playing a key role. Consider the following:
Women tend to be great organizers, can prioritize well, and have an eye for detail. Characteristics like these are a perfect match for operating a franchise.
Women often have the ability to think quickly, improvise, and adapt when necessary. Definite strengths when it comes to operating a franchise.
Women are known to have strong networking and communications skills. Music to a franchisor's ears as communication with the franchisor, vendors, and customers is imperative.
Female business owners also tend to be more financially conservative and willing to start small on their way to growing big. This is the kind of business approach and philosophy that is perfect for opening, operating, and growing a franchise. Franchisors know it.
It's also interesting to note that women today have more opportunities than ever to join in franchising. Organizations such as the SBA and Association of Women Business Centers have established workshops, seminars, mentoring programs, and funding opportunities for women interested in operating a franchise.
Read more at https://www.franchising.com/guides/women_in_franchising_this_business_is_not_just_for_men_anymore.html
Hirzel Dreyfuss & Dempsey represent Fuddruckers franchisees in litigation against major real estate developer
Owners of the Fuddruckers location on International Drive are suing their landlord, President Donald Trump’s business partner Michael Dezer, over Dezer’s plan to convert the former Artegon Marketplace shopping mall into an auto museum and tourist attraction.
The mall and its former owners, Lightstone Group, attracted lawsuits when Lightstone abruptly threw most tenants out in January 2017. At least eight former tenants and Fuddruckers filed suit against Lightstone. The Fuddruckers franchisee, Blue Hills International, recently decided to add Dezer’s company, Dezer Orlando Center LLC, as a defendant.
McDonald's Franchisees Look To Form First National Independent Franchisee Association In Its History
Franchisee Associations come in all sizes. Franchisees in small-to-medium sized franchise systems can benefit greatly from establishing their own “Franchisee Associations” with fellow franchisees in their system. Hirzel Dreyfuss & Dempsey can help you organize and form your own Franchisee Association to even the playing field and avoid abusive conduct on the part of franchisors.
Story: McDonald's Franchisees Look To Form First National Independent Franchisee Association In Its History
Despite the fact that franchising giants like Burger King, KFC, 7-Eleven, Dunkin’ Donuts, and Pizza Hut have had to deal with franchisee associations for many years, McDonald’s has never had a national franchisee association. Now, after all these years, things are about to change.
Various media outlets have reported that 400 McDonald’s franchisees met recently in Tampa, Florida to present and discuss their complaints regarding recent McDonald’s marketing strategies. The franchisees who attended the meeting were reported to account for 25% of U.S. McDonald’s locations.
Over the past few years, McDonald's corporate and its franchisees have faced a number of challenges ranging from employee wage complaints to the NLRB, however, when it comes to franchisees, their revenue and profitability are top priorities. Despite changes in McDonald's leadership and menu changes, U.S. sales have been weak. With franchisees being required to make a substantial investment in their locations the expectation for increased sales is much higher. To date, many franchisees haven't experienced the increased sales they expected.
Franchisee Associations
The establishment of the Coalition of Franchisee Associations several years ago and its ratification of the Franchisee Bill of Rights could portend more franchisees seeking to organize their own associations. How should franchisers deal with the formation of a franchisee association? Resist, encourage or remain neutral?
Advantages:
There is a representative body of franchisees that the franchiser can deal with.
New products and programs can be presented to the group for feedback and suggestions.
The franchise organization can report potential problems or issues to the franchiser before things get out of control. Problems can be discussed among the franchiser and its franchisees to obtain a solution instead of engaging in conflicts and litigation.
The franchisees may perceive the franchisor to be more willing to engage in fair dealing with franchisees, as they have an opportunity to express their lack of satisfaction with certain aspects of the franchise operation.
Prospective franchisees will see a franchisee association as a positive attribute of the franchise company.
Franchisees who are members of an association may have a greater sense of loyalty and commitment to the franchise organization.
Both parties can speak openly at association meetings and address sensitive topics in a productive way. In many cases, a relationship with added trust can develop among franchiser and franchisee representatives.
As the McDonald’s situation demonstrates, it’s inevitable that franchisees will speak among themselves and share both the good and the bad news. It’s far more effective for franchisers to recognize this fact, and strive to have a productive relationship with their franchise.
By Ed Teixeira
Leon Hirzel, of Hirzel Dreyfuss & Dempsey PLLC, Awarded "Legal Eagle" by Franchise Times Magazine
The Law Firm of Hirzel Dreyfuss & Dempsey is proud to announce that our own Leon Hirzel, Esq. has been selected by the prestigious "Franchise Times" in their annual selections of accomplished "Legal Eagles."
According to the Franchise Times: "People often ask what it takes to become a 'Legal Eagle.' Well, it’s not easy. It takes experience, smarts and the wisdom to connect the two. All of the 2017 class of Legal Eagles share those three key attributes. They are intelligent attorneys who have chosen to specialize in the complex world of franchising with the experience needed to chart a path through murky legal waters."
The Franchise Times describes Leon Hirzel's practice, skills, and experience in the following manner:
Leon is a Miami-based franchise trial attorney that focuses on protecting and enforcing the rights of franchisees. He has represented franchisees in numerous different brands and industries in all phases of the franchise life cycle. Leon is fully fluent in Spanish and has represented individuals from all over Latin America seeking to purchase a franchise in the United States or to resolve an issue they are facing with their franchisor. He handles franchise litigation in courts and arbitration proceedings throughout the United States.
Source: The Franchise Times 2017
Stand in Support of Florida Small Business Owners
The Florida Legislature has the opportunity to pass fair legislation that evens the playing field for small business owners across the state. These policies would ensure basics for local businesses that are owned and operated by franchisees, including protections from unjust terminations and non-renewal of their agreements.
The attorneys of Hirzel Dreyfuss & Dempsey strongly support SB 750.
Tell your state legislators how basic protections for franchisees will benefit thousands of small business owners and their hardworking employees here in Florida.
Fill out the form at the bottom of this link to make your voice heard!
Franchisor Blunders, No Wonder Buyers Don’t Read FDDs
The Franchise Disclosure Document (FDD) should be seen by franchisors, their attorneys and state and federal regulators as the most valuable tool for prospective buyers prior to making their decision as to where they want to invest their money into a franchise. The 200-, 300-, or even 500-page document should contain pertinent data and financials about the system, and what protections are given to franchisees in making their investment of tens or hundreds of thousands of dollars.
When franchisors and their legal counsel get it wrong in the company's FDD, making errors, misrepresentations and omissions, it can cause turmoil, financial devastation, and costly litigation for franchisees.
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Read further here
Florida franchise owners could benefit from state proposal
The proposal (SB 750), filed by Sen. Jack Latvala, R-Clearwater, also seeks to make it harder to terminate or refuse to renew contracts with franchise owners.
Read more using this link