A Franchisee employee’s posts are damaging our brand, but the employee is outstanding at the workplace. What should we do?

You are experiencing the “new frontier” of difficult business issues that society will have to deal with in the coming years.  What used to be spoken to a few people is now posted and broadcasted to thousands or millions of people on social media.  The advent of social media has significantly changed how people communicate….

On June 7, 2017, the U.S. Secretary of Labor, Alexander Acosta, announced the withdrawal of the U.S. Department of Labor’s (“DOL”) Wage and Hour Administrator’s Interpretations (“AI”) on joint employment and independent contractors. Recall that in February 2016, the Obama Administration DOL announced that the agency planned to examine dual employer relationships very closely, with…

A “Financial Performance Representation” is a statement by the franchisor regarding how much a franchisee could make if the franchisee purchased the franchise.  The Federal Trade Commission Franchise Rule requires that if a franchisor is going to tell a franchisee how much the franchisee can make operating the franchise, the franchisor must disclose that in…

First, in late November, just in time for Thanksgiving, a Texas federal judge on Tuesday entered a nationwide injunction blocking the U.S. Department of Labor from implementing a controversial rule that would have expanded overtime protections, saying the rule improperly created a de facto salary test for determining which workers fall under the Fair Labor…

Yes, after several years of consideration, Congress has enacted the Defend Trade Secrets Act (“DTSA”).  This is the first federal law designed to protect a company’s trade secrets. A trade secret is another type of intellectual property, such as patents, trademarks, and copyrights.  A trade secret consists of information and can include a formula, pattern,…

Having just completed the renewals for our franchise clients, we spent a lot of time talking with clients about the “joint employer” issue percolating through the National Labor Relations Board.  Most of the revisions to franchise documents this year dealt with the issue of joint employer liability.  For review, the NLRB is currently processing some…

In the wake of the National Labor Relations Board’s (“NLRB”) focus on classifying franchisors to be the joint employer with its franchisees of the franchisee’s employees, several state legislatures are attempting to address how franchisors are affected. Recall that in August, the NLRB issued controversial Browning-Ferris ruling that reversed a line of decisions stretching back…

Yes, and unfortunately, some of your worries concern the government’s oversight of your business.  First, be aware that the Holiday Season is a prime time for the Michigan Liquor Control Commission and local law enforcement departments to conduct “sting” operations, using underage decoys to ensure your compliance with the Liquor Control Law.  To that end,…

Question: Have there been any updates from the National Labor Relations Board on franchising issues? Answer: Yes.  As you know, the NLRB and its treatment of the franchise relationship has been in the news lately, particularly in relation to the franchisor-franchisee relationship being a joint employer relationship, meaning that the franchisor could be liable for…

Question: I have been using my business' name for 3 years.  I think I want to “protect” my name.  What should I do? Answer: Your business’ name is a trademark.  A trademark is a word, slogan, logo, or other indicia of the source of the goods or services.  A trademark used in commerce informs the…

Question:  I think I want to franchise my business, but I need some help.  How would I select a franchise consultant and a franchise lawyer?  Answer:  First, understand that franchising is a business growth strategy and foremost, a business relationship.  Not all franchise agreements and structures are the same, nor should they be, given this…

Question:  I understand that the National Labor Relations Board (“NLRB”) is taking some action against franchisors and franchisees, arguing that franchisors and franchisees are jointly liable for employment practices of the franchisees.  Is there an update? Answer:  Yes.  The franchise industry is under attack by the NLRB.  On December 19, 2014, the NLRB Office of…

Question:  I am hearing a lot of talk about the McDonald’s case at the National Labor Relations Board.  What is going on and should I be worried? Answer:   On July 29, 2014, the National Labor Relations Board (NLRB) general counsel announced that he is authorizing complaints in 43 unfair labor practice cases which allege that…

Question:  I noticed that a competitor is using my name and trademark in a domain name on the internet.  Is there anything I can do? Answer:  The Internet Corporation for Assigned Names and Numbers (ICANN) has a Uniform Domain Name Dispute Resolution Policy (UDRP).  The UDRP sets forth a dispute resolution policy that allows you…

Question:  Recently, I have been discussing with some prospects about franchising my brand.  They want to know how much they can make operating one of my restaurants.  What should I tell them? Answer:  It makes sense that a prospective franchisee would want to first know how much they can make operating your franchise.  However, remember…

Question:  Are there any new developments in franchise sale regulation?  Answer:  There is something we are watching that will change the way franchisors draft their Franchise Disclosure Documents (FDD).  In October 2013, The North American Securities Administrators Association (loosely, the association of state regulator) issued a Proposed Multi-Unit Commentary to change the way that franchisors…

Question:  Will you please explain the annual updating process for my Franchise Disclosure Document? Answer: This is the time of the year when all franchisor Franchise Disclosure Documents need to be updated.  The Federal Trade Commission’s Franchise Rule requires that all franchisors update their FDDs within 120 days of their fiscal year end.  However, some states…

Question:  With the holiday season approaching, what do I need to be concerned about with the sale of gift cards? Answer:  According to the National Restaurant Association, the size of the restaurant gift card industry is fast approaching $5 billion per year.  Despite the fact that gift cards have become increasingly popular, restaurant owners engaged…

Question: I just opened my second restaurant and in the first 2 weeks I’ve been open, more than 20 customers have asked whether they can buy a franchise!  What do I need to do to get the ball rolling? Answer: You’re in luck!  On October 15, 2013 at the MRA Restaurant Show in Novi, Michigan, I…

Question: I want to franchise my restaurant, but only in Michigan.  Can I do that? Answer: Yes, but you have to be very careful.  As we have discussed in previous columns, the offer and sale of franchises is regulated by the Federal Trade Commission and 15 various states, including the state of Michigan.  In order for you…

Question: The theme of this Restaurateur is “Restaurant Design.”  Is my restaurant design protectable under the law? Answer: Generally, yes, under numerous theories, two of which I discuss here.  First, you may be able to protect the architectural design of your restaurant, if you own the design drawings.  In 1990, Congress enacted the Architectural Works Copyright Protection…

Question: I have some follow up questions to your column last edition.  Is counting up my Full Time Equivalent (“FTE”) employees as easy as counting 1 FTE for every 2 part time employees?  Can I escape the Affordable Care Act by segregating my employees into different employers?  Finally, I have a lot of seasonal employees.  Is…

Question: I know you’re an expert in franchise law, but can you give me some advice on the new Affordable Care Act? Answer: Absolutely.  The employer mandate portions of the Affordable Care Act will become effective on January 1, 2014, but some provisions went into effect January 1, 2013!  If you filed more than 250…

Question: How do I incorporate training into my systems?  Answer: Training is critical element of integrating a new franchisee into your system.  And a franchisee’s training of its employees in integral to the franchise system’s success.  At the MRA Show last month, we were lucky enough to have Dave Hood, President of iFranchise Group (www.ifranchisegroup.com),…

Question: How should I assist my franchisees with the operations of the franchised location?  Answer:  Systemized Operations … the hallmark of a successful franchise system.  What are “systemized operations?”  Since you are in the restaurant industry, you probably notice the little things when you visit restaurants.  When you visit a franchised restaurant, you probably notice…

Question: How should I assist my franchisees with the site selection process? Answer: After the process of selecting the proper franchisee, site selection is the next most important decision you and your franchisee must make!  The site selection process requires that you (1) understand your customers; (2) understand your new market; and (3) understand the…

Question:  Once I sell a franchise, how can I assure that the franchisee will follow the system?  Answer:  A franchisee will want to follow the system because they have spent considerable time researching (1) the industry or market segment; (2) opening up an independent business operation in your market segment; (3) other franchise opportunities in…

Question: I want to franchise my business, but want to protect myself from a franchisee who tries to copy my system. Can I do that? Answer: Yes. Your franchise documents should contractually protect your system from renegade franchisees. But first, be reminded of our discussions of designing your franchise system. Recall that in designing your…

Question: If I want to franchise my concept, I understand that I need to have federally registered trademarks, my systems documented, and my franchise disclosure document prepared, among other things. Are there ongoing expenses to franchising? Answer: Yes, the Federal Trade Commission’s Franchise Rule requires annual updates. The Franchise Disclosure Document is a snap shot…

Question: I have been reading with interest the series in the Michigan Restaurateur on how to prepare a concept for franchising. I understand that I need to develop my brand, systems, operations and unit economics. I understand that I need to duplicate my concept in different markets. I also understand that I need to federally…

Question: I have been reading with interest the series in the Michigan Restaurateur on how to prepare a concept for franchising. I understand that I need to develop my brand, systems, operations and unit economics. I understand that I need to duplicate my concept in different markets. I also understand that I need to federally…

Question: I have been reading with interest the series in the Michigan Restaurateur on how to prepare a concept for franchising. I understand that I need to develop my brand, systems, operations and unit economics. I also understand that I need to duplicate my concept in different markets. What else should I consider before I…

Question: I have been reading with interest the series in the Michigan Restaurateur on how to prepare a concept for franchising. What else should I consider before I franchise my concept? Answer: In December, we focused on brand development and what makes a brand unique. In February, we discussed systems development, emphasizing the need to…