New Rules on Earnings Claims- Which Franchise Brands Do They Hurt or Help?

“How Much Money Can I Make with Your Franchise Brand?” The New Rules on What You Can Say —-

The FTC permits a franchisor to make financial performance representations, also called “FPRs” or “earnings claims”, in Item 19 of its franchise disclosure document, “FDD”.

The franchisor has to have “a reasonable basis” for the representations.

Starting next year, early 2018, the rules for FPRs will change for many franchisors.

Here is just one example of the effects of the changes.

Some franchisors provide just average or median sales information in their Item 19.

But, starting in 2018, franchisors will need to add highest and lowest sales in the sample set.

There are many more changes, which our panel will helpfully point out to you.

This matters to you, your franchise brand, and how you sell franchises in a lawful manner.

You need to stay up to date on these changes.

CAFA has a terrific panel of well regarded state regulators & highly experienced franchise attorneys to help you out.

So, come to CAFA on Tuesday, September 19th to find out which of your franchise selling practices will be affected by the new rules & what you can do to prepare for these changes.

Dale Cantone – is an Assistant Attorney General for the State of Maryland and the Deputy Securities Commissioner for the Maryland Securities Division.

Dale is the chief of the franchise and business opportunity unit of the Maryland Securities Division. In addition, since 1996, Dale has served as Chair of the Franchise and Business Opportunity Project Group of the North American Securities Administrators Association, Inc. (“NASAA”).

NASAA is a group of state administrators that proposes model laws, policies, and initiatives to promote investor protection as well as uniformity at the state level. Among other initiatives, NASAA authored the Uniform Franchise Offering Circular Guidelines.

Tim O’Brien — Chief Examiner Virginia Division of Securities & Retail Franchising Richmond, Virginia

The Virginia Division of Securities and Retail Franchising is responsible for the regulation of securities, broker-dealers, broker-dealer agents, investment advisers and their representatives.

It is also responsible for the registration of franchises and trademarks in Virginia.

David Cahn, Franchise Attorney since 1995, speciality practice focused on franchise relationships, extensive experience with regulatory compliance, transactions involving franchised businesses and disputes between franchisors and franchisees.

Warren Lee Lewis, Moderator, is the author of The Franchise Seller’s Handbook.

And recently awarded, The Best Lawyers in America 2009-2016, Listed in Washington, D.C. for Franchise Law

Two of the IFA’s Legislative Concerns

Two weeks ago, I wrote up an overview of How Important Franchising was to the US Economy, based on Steve Caldeira’s presentation to CAFA.

I have looked at the presentation further, to find out what the IFA was doing at on the legislative level.

Here is an overview of the IFA’s top concerns.

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Now, I found it very interesting that the IFA, which is mostly comprised of franchisors, would be interested in “Workforce Regulations”.  

My experience as a franchisor is that franchisors are very reluctant to discuss with their franchise owners anything do with HR compliance.  

Franchisors leave it to franchisee owner’s to obey all state and federal workplace laws.

Even more puzzling to me was this slide:

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Ok, I get why franchisors are worried about anything that extends the jurisdiction or reach of the NRLB.

But, why are franchisors worried about David Weil, “the nominee for Wage & Hour Division Administrator”?

Wage and Hour violations happen at the franchise owner level, unless the franchisor has significant units not in compliance.

The audience didn’t get an chance to ask Steve more about this, so I am putting this out there.  

Why should the franchisor be worried about more Wage and Hour violations, unless their own units are not in compliance?  

Why is the franchisee’s failure to comply with local state and federal Wage and Hour laws a concern for the franchisor?  I don’t get it.

 

Why Franchising Is Important to the US Economy – IFA Recap

Over the past three years it’s become an annual event for the Capital Area Franchise Association – CAFA to have Stephen Caldeira, President of the International Franchise Association – IFA get the new year started with his franchising outlook.

Until this year when unfortunately Steve was unable to make for CAFA’s January 2014 lunch & learn event. No worries however Steve made Scott Lehr Vice President U.S. & International Development at the IFA available to take his place. I have known Scott for as long as I have been in franchising and we were pleased to have him stand in for Steve. 

Well our unprecedented winter weather put the kibosh on CAFA’s January meeting at the very last minute. We had to reschedule. And when we did I received an email that Steve could speak at our March event.

For those of you who haven’t made it to a CAFA event attendees begin arriving around 11:30 AM or so to sign in, get their badges, talk with each other until the lunch service begins. Our featured speakers and panelists session begins at 1:00 PM, ends promptly at 2:00 PM and there’s post meeting networking as well.

One of the pleasures of being President of CAFA is every year I get to have Steve at my table for lunch every January and of course this year in March. Which is great and I look forward to it each year. 

Now something I learned about Steve 3 years ago was that when he speaks at a luncheon like CAFA as part of his game plan he forgoes lunch and pays all of his attention on his table mates. This year was no exception. And one of the things he shared with me was how much he enjoys the CAFA meetings each year. There’s one additional benefit to sitting with Steve, the table gets an extra dessert to share. 

Both Steve and I in our careers have worked for large QSR franchise systems and we compared notes on franchisee and franchisor relations and in particular working with franchisees to resolve troubled situations. Our experiences paralleled in that it was always more desirable to exhaust all efforts to work things out with franchise owners whenever possible. Franchising and the IFA is fortunate to have a leader like Steve who has hands on franchise experience and is so genuinely relatable and engaging.

In Steve’s presentation it was reinforced how vital franchising is to the US economy and livelihoods of so many people.

Here are some select slides that do a great job of showing the importance to and impact of franchising.

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