Winter 2023
The Future of Non-Competes in Franchising Is Up for Debate
By Tyler Hartney
On January 5, 2023, the Federal Trade Commission (FTC) issued a proposed rule which, if enacted, would ban most employment non-competes. The proposed rule would make it “an unfair method of competition for an employer to enter into or attempt to enter into a non-compete clause with a worker.” As it currently stands, the FTC’s definition of a “worker” specifically excludes “a franchisee in the context of a franchisee-franchisor relationship.” The public comment period on the proposed rule is open until March 20, 2023, meaning that the franchise exception is now up for debate. It is critical for the success of all franchise systems that the exception remain in the final rule.
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Franchise Sales Questionnaires and Acknowledgments
By Mark Landauer
On September 18, 2022, the North American Securities Administrators Association (“NASAA”), an association which includes state franchise regulators, adopted a Statement of Policy Regarding the Use of Franchise Questionnaires and Acknowledgments, which sets standards for the use of questionnaires and acknowledgments in the franchise offering process (the “Policy”). In short, the Policy aims to prohibit the use of questionnaires or acknowledgments in the franchise sales process, as NASAA argues that the benefits of questionnaires and acknowledgements are outweighed by their potential as a liability shield against franchisee claims of misrepresentation or fraud.
California’s New Franchise Law Changes Are Now in Effect
By Jessica Johansen
Franchisors and franchisees have a shared interest in developing strong advertisement programs. The ubiquitous cell phone is an efficient and effective way to reach consumers directly through automated texts and calls. This type of advertising, however, is regulated by the Federal Telephone Consumer Protection Act (TCPA) as well as state consumer legislation. Last year, franchisors and franchisees breathed a sigh of relief when the Supreme Court narrowed the TCPA’s reach, but another recent decision by a lower court highlights remaining risks under similar state laws.
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News and Events
Larkin Hoffman was named a “Best Law Firm” by U.S. News – Best Lawyers for 2023. The Firm’s franchise and land use practices again received national recognition and were ranked in the first tier regionally. Eight of the firm’s other practices were ranked in regional categories, including construction law, real estate litigation, environmental law, eminent domain and condemnation law, land use and zoning litigation, tax litigation, tax law, and municipal law. The rankings are based on a rigorous evaluation process that includes thousands of clients, highly skilled lawyers, and law firm representatives.
Joe Fittante, Max Schott, Jim Susag, Susan Tegt, Sawan Patel, and Chuck Modell were listed in The Who’s Who Legal: Franchise 2022. 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 nearly six hundred of the leading franchise lawyers in the world.
Community Service
Larkin Hoffman’s employees held their Annual Bake Sale fundraiser on December 6, 2022. The proceeds from the Annual Bake Sale went to two local charities: Volunteers Enlisted to Assist People (VEAP) and the Santa Cop Program. VEAP is a basic needs and social services organization whose programs promote access to healthy foods, stable housing and other supportive services. Each year, the Santa Cop Program selects twenty Bloomington children who have experienced trauma or are low income, partner them with a Bloomington Police officer, and provide them with funds to go holiday shopping for themselves and their families.
Larkin Hoffman was also a sponsor of the 2022 Gala for the Benefit of Bridging, which raised more than $665,000. Bridging is the largest non-profit furniture bank in the United States. Serving the greater Twin Cities area, Bridging provides quality, donated furniture and household items to people transitioning out of homelessness, poverty, and other difficult circumstances. Dan Kadlec, a shareholder in Larkin Hoffman’s Corporate and Finance Group, serves as a member of Bridging’s board.
Franchising with Larkin Hoffman
If you are interested in franchising your business or would like to know more about franchising, please visit our website for additional information and resources.