In franchising, not knowing about the Lanham Act or understanding its purpose and requirements is potentially catastrophic. The Lanham Act is the foundation upon which franchising is built and without it, the franchise license we give to our franchisees would have little validity.
The AFA is proposed federal legislation designed to do one thing: establish in statute a clear legal definition of the franchise relationship that protects franchisors from being classified as joint employers of their franchisees and their franchisees’ employees.
The expert’s function is not to manufacture opinions to fit a narrative, but to explain and contextualize the facts, serving as a translator between the realities of the business and the legal forum in which the dispute is being resolved.
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.
MSA Worldwide Franchising Resources & Library
