What are the Penalties for Franchise Disclosure Violations?

Published on: January 17, 2013 Author: Mary Beth Gettins Leave a comment

In this week's post we discussed a case regarding personal liability for a violation of state franchise disclosure laws. Here is an infographic outlining the potential exposure for violations of franchise disclosure laws!

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- Minimum Sales Requirement More Than Double in 10 Years
  Over the last 10 years or so, franchisors have begun including performance standards, minimum gross sales requirements, and minimum royalty rates in their franchise agreements. Whatever vintage they are (sales requirements, minimum sale or royalty), the whole rationale is this: The franchisor wants to make sure that the franchise territory is not tied up, underperforming,… More »
- I paid the minimum royalty fee. Can I still be in default of the franchise agreement?
  Franchise Agreements may contain minimum royalty fee requirements and performance standards. What is the difference between the two? Can you be in default even if you pay the minimum royalty fee amount? Listen to the video and learn the answers.
- Did You Update Your Employee Background Check Forms?
  Beginning January 1, 2013, Employers were required to update the forms they use for securing employee background checks. As we have discussed in this blawg on several occasions, performing an employee background check is not as simple as turning an employee’s name, birth day¸ and social security number over to a credit reporting agency and… More »
- Non-English Speaking Franchise Prospect, What is a Franchisor to do?
  So you have a franchise prospect. The prospect’s native language is not English. Maybe the franchise prospect is not very fluent in the English written word. Do you have to translate the franchise disclosure document into another language? The quick answer is ‘NO.’ US franchise disclosure laws do not require franchisors to translate the franchise… More »
- I Don’t Manage. I Do the Work. You owe me overtime.
  What are the most common wage and hour claims? First comes failing to pay people for dunning. Second comes not paying for work performed off the clock. Fourth comes docking employee’s pay for lunch hours that never happened. I am just guessing here. Wait, I forgot one: Misclassifying of workers as salaried employees. Misclassifying workers… More »
- We have made it into a workbook compilation!
  Did you see this timeline? Did you find it helpful? We have put together a workbook compilation. The workbook compilation has the need to know information for franchisors and worksheets to compile the data for updating the franchise disclosure document. The timeline is just one of the tools in the workbook! To see a preview… More »
- Zappos gets Zapped!
  A security breach involving 24 million customers is a bad day. Having to go to court to defend yourself against a class of angry customers is equally a bad day. That is exactly where Zappos.com is. In January of this year, Zappos notified 24 million of its customers that a security breach had occurred. The… More »
- Failed Franchise Registration Results in Huge Personal Franchisor Liability
  How can a really sweet deal turn into a really bad nightmare? That is perhaps what two franchise founders are saying to each other about now. Michael and Kathy Butler (collectively the “Butlers”) are seasoned public relations folks. Michael Butler has had his own PR firm for 30 years. The Butlers came up with the… More »
- No Money in the Bank? Your franchise agreement is terminated!
  There are countless grounds for termination of a franchise agreement. Failure to pay royalties is most assuredly grounds of termination of the franchise agreement. Abandonment of the franchise business is another sure bet for termination of the franchise agreement. Not operating franchise business in compliance with franchise standards, transferring franchise assets without franchisor approval, under… More »
- Franchisor left on the hook for state law violations.
  Recently on the Gettins’ Blawg, we discussed the case of CHUTICH et al v. PAPA JOHN‘S INTERNATIONAL. In that case, consumers were trying to hold the Papa John franchisor accountable for endorsing a franchisee practice of texting a consumer contrary to federal consumer protect laws. Franchisors working nationally should be aware and informed about national… More »
Franchise
- It is that time of year again! FAQ About Franchise Sells, Disclosure, and Annual FDD Updates [A SlideShare]
  As the advent of the FTC rule's deadline for updating the franchise disclosure document approaches, questions abound about proper disclosure, sells, and re-disclosures. Watch the slide share to get the facts and answers to frequently asked questions. Still have more questions or need more information? Give us a call!
- Attention All Franchisors!
  Are you a franchisor? Do you have any franchisee locations in New York? If you answered,” yes,” to both of these questions, you need to file an annual information return. Do not delay. The deadline is March 20th . To prepare for the filing you will need information about the revenues and royalties reported… More »
- How much will it cost? Giving a Good Estimate. (A video)
  At the close of the fiscal year, franchisors are required to update the franchise disclosure document. Previously we posted a Franchise Disclosure Document Update Timeline. The timeline is designed to give a simple step-by-step schematic for updating the franchise disclosure document. On December's to-do list is reviewing the estimated initial franchise investment listed in the disclosure document. This video discusses what should be included as part of the initial franchise… More »
- Franchise Agreement Terminated-Without Notice
  When can a franchisor terminate a franchise? It says it right in the franchise agreement. Probably, toward the back of the franchise agreement, it says the franchise agreement may be terminated if….. These reasons for terminations in legal vernacular are called defaults. There are defaults that can warrant the franchise agreement being terminated… More »
- Franchise Disclosure Document- Releasing the Update
  With 120 days post the close of the fiscal year fast approaching, franchisor must decide when to issue their updated franchise disclosure document [FDD]. It is not as simple as picking a date out of the air. Here is an infographic about the considerations for selecting an issuance date.
- Franchisor not liable for Franchisee!
  Copyright (c) 123RF Stock Photos What happens? Consumer trips and falls at a franchise store. Home owner complains that the franchisee’s work is shoddy and wants his money back. Franchisee’s employee alleges a failure to pay overtime. More times than not, the franchisor gets sued along with the franchisee for these issues. It happened at… More »
- Franchise State Registration and Exemptions!
  Franchisors and business owners, do you want to have a presence in more states? Do you want to reach more consumers? Do you want to reach more consumers? Some states require a registration or exemption before selling or offering a franchise! Watch the slide show to learn more.
- Handling New Deals and Closing Old Business
  Over the last several months we have been posting about updating the franchise disclosure document. For many franchisors, the time to update the franchise disclosure document was April 30th. With the deadline for updating the franchise disclosure document past, it is now time to re-focus on the franchise sales. View Survey

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What are the Penalties for Franchise Disclosure Violations?

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