Schuyler "Rocky" Reidel’s Post

As a seasoned franchise attorney, it's worth noting that President Biden's recent decision to revive the NLRB’s Joint Employer Rule was not entirely unexpected. Historically, fluctuations in NLRB decisions are often directly tied to presidential prerogative, specifically through the appointment of the NLRB board members. Predictably, this action signals a return to the pattern established during the Obama administration. Of course, this move has brought along a fair share of apprehensions and uncertainties, as it invariably opens up franchisors to potential liability for labor infractions within their franchisees' operations. It could also compel them to negotiate with unions for the very same workers. However, it's important to bear in mind that the franchise industry is not a stranger to these rules. In fact, during the Obama administration, franchisors had already undergone considerable adjustment to operate within these boundaries. For those who weathered the regulatory climate during that time, there is a degree of familiarity and experience to draw on. Undoubtedly, the NLRB's rule will continue to be challenged in court, as critics argue its possible negative impacts, especially on underrepresented Americans finding success through franchising. Yet, the franchise industry is nothing if not resilient. While President Biden's move may seem like a significant shift, it's a terrain that many franchisors have navigated before. Adaptation is an inherent aspect of franchising and I have confidence that the industry will adjust once again, finding ways to flourish, as it always has. This is undoubtedly an essential conversation to have, and I welcome your thoughts and experiences. How do you see this affecting franchise businesses in the long run? #franchise #franchising #NLRB

Many of you saw that on Friday, July 12, the Federal Trade Commission issued a series of policy statements impacting franchising – nearly a year and a half after its initial Request for Information on franchising.   Our view is these FTC statements largely reiterate current law and common contracting practices related to fee disclosures and confidentiality clauses. It appears the FTC is searching for a problem in franchising that simply doesn’t exist to satisfy their flawed hypothesis that franchising is unfair. IFA has long supported greater transparency and visibility in the franchise sales process, and this year we announced our Responsible Franchising policy recommendations, which we urge the FTC to adopt. We encourage open, candid communication among franchisors, franchisees, and federal and state regulators as a foundational component of healthy franchise relationships. We certainly denounce any retaliatory conduct intended to silence communication among stakeholders in the franchise community – although the notion that there is some systemic attempt throughout by franchisors to silence franchisees voices, as the FTC seems to insinuate, is a red herring and simply untrue.   It is our goal to ensure the FTC understands that franchising is working—for the benefit of small business owners, the workers they employ and the consumers they serve in communities across the country. The Commission should base its actions on facts and data, rather than ignoring both empirical data and the experiences that IFA members communicated to the Commission in their responses that the vast majority of franchise relationships are healthy and productive – experiences echoed by both franchisors and franchisees. We will continue to work with the FTC – and all those in franchising – to promote Responsible Franchising and rather than broad, sweeping government actions that could harm the entire model. To hear more of the IFA, franchisor, and franchisee perspectives on the FTC, join us for a web conversation with Michael Layman, Sarah Davies, J. Mark Dady and David Koch, “Making Sense of the FTC,” on July 25, 2024, at 11:00 ET on how we got here, what this means, and what happens next. Register here: https://lnkd.in/e6YWbCGf

The FTC just cracked down on junk fees and shady non-disparagement clauses! On July 12, 2024, the FTC declared that franchisors must now reveal all fees upfront. Goodbye to hidden costs for tech, training, or marketing that often blindsided franchisees! 🙌 Now this was already the case per the Franchise Rule but there was some gray area around some fees and how they may be imposed in the future. Perceived abuse has led to this gray area now being brought clarity by the FTC. Additionally, franchisors can no longer silence franchisees with non-disparagement clauses. This ensures franchisees have the right to report dubious practices to the government without fear of retaliation. The FTC's stance is clear: "Clauses prohibiting franchisees from reporting potential law violations to the government are considered unfair and unenforceable." Their commitment to protecting franchisees, like those at Dickey's Barbecue Pit and Subway, marks a significant shift in franchise oversight. For instance, a Dickey's operator revealed that while they were told it would cost $400,000 to open a location, the real cost often doubled. Hidden vendor kickbacks and inflated costs hurt their bottom line. This new FTC guidance aims to curb such practices and ensure transparency. This isn't just about policy—it's about ensuring that the franchise model benefits everyone involved. The FTC has reopened the comment period on franchise regulations until October 10. Now is the time for all stakeholders to voice their concerns and shape the future of franchising. #franchise #franchising

Crucial Role of Franchisee Selection: A Legal Perspective I've witnessed firsthand the critical importance of franchisee selection in my 10 years as a franchise attorney. The recent bankruptcy filing of World of Beer (WOB) serves as a stark reminder of this truth. Key Takeaways for Franchisors: Quality Over Quantity: Resist the temptation to sell franchises indiscriminately for rapid growth. Prioritize finding experienced, committed operators. Clear Expectations: Establish and communicate expectations for franchisee involvement from the outset. If you want owner-operators, make this non-negotiable. Due Diligence Goes Both Ways: While franchisees must conduct due diligence, franchisors have an equal responsibility to thoroughly vet potential franchisees. Tailored Selection Process: Implement a rigorous selection process that aligns with your brand's specific needs and values. Ongoing Support: Provide comprehensive training and support to help less experienced franchisees succeed. Legal Considerations: Franchise Agreements: Craft agreements that clearly outline expectations, including operational involvement and experience requirements. Disclosure Documents: Ensure your Franchise Disclosure Document (FDD) accurately represents the level of experience and involvement expected from franchisees. Dispute Resolution: Implement clear dispute resolution mechanisms to address issues before they escalate to costly legal battles. Action Steps for Franchisors: Review and update your franchisee selection criteria. Conduct a legal audit of your franchise agreements and FDD. Develop a comprehensive franchisee training program. Establish regular performance reviews and support mechanisms for franchisees. Remember, the franchisees you choose today will shape your brand's future. Invest the time and resources necessary to make informed decisions. By prioritizing quality franchisees and providing robust support, you can build a stronger, more resilient franchise system that benefits all stakeholders. #franchise #franchising

🚨🚨 Significant changes to how franchise brokers and third-party sellers operate in California, per proposed bill no. 919. As an advocate for responsible franchising, I'm curious to hear thoughts on this proposed bill. The bill aims to improve the pre-sale process for prospective franchisees, ensuring they have a better understanding of what they're investing in and who they're dealing with. Do you believe it will effectively address the challenges in the franchise sales space? Share your insights and let's spark a constructive discussion on the future of franchising regulation in California. #FranchiseRegulation #SB919 #FranchiseIndustry #CaliforniaBusiness #TransparencyInFranchising

REGISTER NOW! W-6: The Favorite Child: Legal and Practical Implications of Treating Franchisees Differently But aren’t I your favorite? Most franchise agreements explicitly disclaim the franchisor’s obligation to treat individual franchisees the same or expressly reserve the franchisor’s right to enforce the agreement terms selectively. Franchisors might consider treating some franchisees differently than others, including when negotiating franchise agreements, implementing new programs or system changes, accommodating franchisees in need of assistance during the term, seeking to prevent the loss of a franchise unit, policing system standards, and enforcing the noncompetition covenant. Treating franchisees differently, however, can have significant consequences. Franchisees often cite unequal treatment as a defense to franchisor claims or to support their claims against franchisors. Join Matthew DeAntonio (Bradley Arant Boult Cummings LLP) and Mackenzie D. (Einbinder & Dunn LLP) as they examine the practical and legal implications of franchisors applying the terms of the franchise agreement or brand standards in different ways. Learn more and register HERE https://lnkd.in/gmpytNcQ

The FTC has issued a policy statement addressing franchisors’ use of contract provisions to suppress franchisee allegations of legal violations. Learn more about the implications in our latest franchising blog post. #FTC #Franchising #LegalUpdate #FranchiseLaw

The FTC has issued a policy statement addressing franchisors’ use of contract provisions to suppress franchisee allegations of legal violations. Learn more about the implications in our latest franchising blog post. #FTC #Franchising #LegalUpdate #FranchiseLaw

The FTC has issued a policy statement addressing franchisors’ use of contract provisions to suppress franchisee allegations of legal violations. Learn more about the implications in our latest franchising blog post. #FTC #Franchising #LegalUpdate #FranchiseLaw

The FTC has issued a policy statement addressing franchisors’ use of contract provisions to suppress franchisee allegations of legal violations. Learn more about the implications in our latest franchising blog post. #FTC #Franchising #LegalUpdate #FranchiseLaw