The American Franchise Act (AFA) is a singularly important bill to clarify the meaning of joint employment. In the past ten years the definition of joint employment has changed four times, causing significant damage not only to franchisees and franchisor but to the American consumer, workers, and our economy.
The Federal Trade Commission recently announced a new rule that will ban employers from imposing non-compete clauses on their workers – but the new rule will not prohibit non-compete provisions between franchisors and franchisees.
In its update in 2007, the Commission decided to eliminate the requirement that franchise sales organizations and brokers provide material disclosure to the potential franchisees they are working with. While removing that information from a franchisor’s disclosure document was a sensible decision, eliminating broker information entirely left prospective franchisees in significant jeopardy.
We recommend scrubbing franchise manual libraries, training programs, and agreements to remove unnecessary controls. Our goal is to put the franchise relationship back into proper balance between brand standards versus control.
This in-depth presentation covers joint employment issues, including the legal landscape and how franchisors should change the ways in which they maintain and enforce brand standards.
Understanding the root cause of noncompliance can surface underlying issues the franchise system may need to consider in formulating a change strategy.
Of all the mistakes new business owners make, the most fatal is failing to anticipate the cost of getting and staying in business.
A qualified franchise attorney can separate contract terms and obligations that are “acceptable” or a “common practice” in a franchise relationship from those that may be excessive or unusual, and can help you negotiate with a franchisor.
Companies new to franchising have difficulty understanding the essential differences between services provided by experienced franchise legal counsel and those provided by qualified franchise consultants in developing the structure and strategy of a franchise system.
In order for franchisors to legally franchise their businesses in the United States, franchisors must be aware of, and comply with, all of the foregoing laws described in this article.
MSA Worldwide Franchising Resources & Library
