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Franchisor 101

Exploring California’s Franchise Exemptions – Part 3

Last month we looked at four exemptions franchisors use to avoid the registration and presale disclosure requirements of California’s Franchise Investment Law. Several lesser known exemptions that can be used by franchisors are:  A.  Fractional Franchise Exemption: An offer is exempt from registration and disclosure if: 1) the purchase involves adding a new product line to the […]

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Exploring Exemptions Under California’s Franchise Investment Law – Part 1

Over the next several months, we will explore exemption based franchising in California. This month, we will provide an overview and consider the benefits and risks related to claiming exemptions. Next month, we will examine the most utilized exemptions. In October, we will briefly discuss the remaining, lesser known exemptions. Under California’s Franchise Investment Law […]

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The Court Delivers A Lesson To Franchisors

In Patterson v. Domino’s Pizza, LLC, Ms. Patterson, an employee of a Domino’s Pizza franchisee, alleged she was sexually assaulted by her store manager. She filed suit against the franchisor, Domino’s Pizza, claiming Domino’s was vicariously liable for the assault as her employer. Domino’s argued that it was not Ms. Patterson’s employer because the franchise agreement […]

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Franchise Friendly – Georgia?

When you think of franchise friendly states, do you think of Georgia? Starting July 1, 2012, franchised businesses and entrepreneurs considering a franchise model might want to take a closer look at that state. The “misclassification” of employees as franchisees has been a hotly litigated issue of late. Classification matters because it determines whether the […]

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Franchisors With Franchisees In Iowa Are Subject to Iowa Income Tax

On December 30, 2010, the Iowa Supreme Court upheld the state’s ability to tax out-of-state franchisors based solely on the use of their intangibles by franchisees located in the state. This decision, although not unexpected, will lead to increased enforcement efforts in Iowa, and perhaps other states.   In KFC Corporation vs. Iowa Department of Revenue, […]

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Clearly Stated – The Pitfalls Of Ambiguity

Franchisors typically enjoy an advantage in franchise relationships-they draft the franchise documents. Reward never comes without responsibility, though, and the franchisor, as drafter, must clearly state the terms of the agreement. Ambiguous language in franchise documents can be dangerous because courts will generally interpret the meaning of ambiguous provisions against the drafter. In Husain v. McDonald’s Corporation, McDonald’s […]

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New California Franchise Regulation

The California Assembly will soon hold committee hearings on new franchise legislation that could, if passed, dramatically effect franchising relationships in California. AB 2305, the Level Playing Field for Small Businesses Act of 2012 (the Act), proposed by Assemblyman Huffman (D-San Rafael), would revise California’s Franchise Investment Law and Franchise Relations Act to provide, among other things, […]

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