Franchise Lawyer Blog

Tools of the Trade

As we never get tired of saying, franchise law is ever changing and evolving. This is partially because the business model itself is constantly in flux as new industries are explored. But this is also true because the law governing franchising has recently changed in dramatic fashion and is in the process of being interpreted in practice and in court. Since July 2008, the Uniform Franchise Offering Circular (“UFOC”) has been replaced by the Franchise Disclosure Document (“FDD”), with new regulations associated with those new documentary requirements.

All attorneys try to stay up to date with trends in the law, but in franchising it is necessary to be particularly vigilant. Most practitioners are familiar with the standard resources: treatises, textbooks, case law. We thought it worthwhile to mention a few other sources of valuable information.

One of the more interesting ways to stay abreast of legal developments is to join the American Bar Association’s Forum on Franchising and participate in that Forum’s “listserv,” which is an email discussion group that provides a remarkable amount of information on a current basis on questions that are arising in the franchise practice. Recent discussions have concerned “evergreen renewal” clauses and the practice of offering variations on initial franchise fees from one franchise sale to another.

Another valuable source of current information is the ABA’s Franchise Law Journal, which can be obtained on the ABA’s website. The FLJ is a quarterly. The most recent issue provides an interesting prognostication of what is in store for the franchise industry for 2009, as well as its regular collection of current cases in franchising and distribution, an invaluable resource for how to avoid trouble in creating franchise documentation.

To see the types of franchise disclosure document (“FDD”) that are actually being filed, either in order to review a particular filing or to get a sense for the drafting and terminology in use, one can refer to the filings made with the State of California, which are a public record. That record covers nearly the entire franchise universe, as nearly everyone in business gets to California sooner or later. In order to do so, access Cal-EASI. Once there, click on the tab entitled: Access to Securities Filings (“Cal-Easi”). Once at the database main page, you will be able to search for franchise and securities filings by corporate name, federal tax ID numbers, document type and other searchable categories.

The above items have offered insight on areas that actually come up for the franchise practitioner and would be of interest to anyone active in the business.

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