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NASAA Proposes Major Changes to Franchise Disclosure Document Cover Page – Comments Are Due This Week
On June 12, the North American Securities Administrators Association (NASAA) issued a proposal to revise the state cover page to Franchise Disclosure Documents (FDDs), essentially adding several pages to the beginning of the FDD. While we do not believe most franchisors would object to inclusion of the new materials in their FDD, franchisors (and others) have until the end of this week to submit comments to the proposed revisions.
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Topic 606 – is Your Net Worth (Equity) About to be Decimated?
By Chuck Modell and Todd Lifson*
Franchisors who have not been talking to their accountants recently may soon be in for a very big surprise. In the past, franchisors have typically taken their initial franchise fees into income when a franchisee opened for business or, in other words, within a few months after granting a franchise. Under Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-09 Topic 606 Revenue from Contracts with Customers (Topic 606), which is in effect now for public companies, and will be effective next year for private companies, generally requires up-front fees to be deferred and taken into income over the term of the franchise agreement.
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*Todd Lifson is a partner in the Minneapolis office of Lurie, LLP
What Does Dynamex Really Mean For Franchising in California?
By Henry Pfutzenreuter
The California Supreme Court’s decision in Dynamex Operations W., Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018), sent shockwaves through California’s business community in May when the court adopted a new standard for classifying workers as independent contractors or employees. The standard is heavily tilted in favor of the latter, beginning with a presumption that a worker is an employee, and placing the burden on the hiring entity to establish three factors supporting its classification otherwise. The decision could theoretically affect a host of industries in California, including franchising, which depend on the flexibility associated with contractual relationships as opposed to employment ones. But is California really poised to destroy the franchise business model by classifying franchisees as employees of franchisors?
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News & Events
Larkin Hoffman was recognized as a leading franchise firm in the 2018 edition of Chambers USA: America’s Leading Lawyers for Business, an annual guide identifying the top attorneys and firms in the United States. Chambers made note of the team’s “strong bench of attorneys offering notable experience and expertise in franchising M&A and regulatory and compliance work.” Chuck Modell, who has been ranked nationally for 11 consecutive years, was described by a client as an attorney who “is able to take complex problems and make them simpler, drawing on his experience to show you what to do.” Joe Fittante, who has been nationally ranked by the publication for 10 years, was described as “practical, hard-working and very pleasant to deal with.” Chambers USA is one of the world’s leading publishers of guides to the legal profession, ranking leading firms and lawyers in an extensive range of practice areas throughout the United States.
Franchise Times has named Chuck Modell, Joe Fittante, and Jim Susag as Legal Eagles again this year, a designation awarded to the top franchise lawyers in the United States and Canada.
Chuck Modell, Joe Fittante, and Sawan Patel will be listed in the International Who’s Who Legal: Franchise 2018, published by Who’s Who Legal. The list is made up of franchise attorneys identified through comprehensive and independent surveys of peers in both general counsel and private practice positions worldwide. By receiving this honor, these three Larkin Hoffman attorneys are recognized among fewer than 200 leading franchise lawyers in the United States.
Jim Susag and Sawan Patel were speakers at the IFA’s Legal Symposium on May 6-8 in Washington, D.C. Jim presented a session titled, “A Litigator’s Perspective on Arbitration – A Practical Session.” Sawan presented a session titled, “A Practical Guide to Managing Issues Faced by Smaller and/or Start-Up Franchisors.”
Chuck Modell was a speaker at the International Franchise Association Franchise Development Seminar, presenting a program entitled, “Item 19 and Your (Franchise) Sales Process.” Joe Fittante served as a moderator. The event was held in Minneapolis on May 16.
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In the Community
Larkin Hoffman was a sponsor of the American Cancer Society Relay for Life this June. This event raises awareness and financial support in the battle against cancer. The firm has sponsored and participated in the Relay for Life for 23 years. In addition to the firm’s financial sponsorship and contribution, many attorneys and employees contribute money and time participating in the relay.
Larkin
Hoffman marched in Twin Cities Pride’s Ashley Rukes GLBT Pride Parade
on June 24. More than 50 of the firm’s attorneys and staff members, as
well as their family and friends, marched in support of Twin Cities
Pride’s mission of commemorating a diverse heritage, fostering inclusion
and celebrating achievements in equality. Larkin Hoffman joined 140
other groups, organizations, and businesses of all sizes in one of the
largest LGBT events in the United States. Our firm is leading the way as the only law firm to have marched in the parade this year and we encourage other law firms to join us in the future.
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Summer 2018 Issue
Our Professionals
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Charles Modell, CFE
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Joseph Fittante, Jr.
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Mark Robertson
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James Susag
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William Thornton
Susan Tegt
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Sawan Patel
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Inga Schuchard
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Bryan Huntington
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Henry Pfutzenreuter, editor
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Jill Henson
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Jan Jahn
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