Contributory Liability — An Underutilized Trademark Remedy for Franchisors

Franchise systems often confront the situation of a terminated franchisee who has failed to remove the franchisor’s signage from the franchisee’s leased location. This can be especially frustrating when the franchisee is insolvent and has little to risk by continuing to operate, or when the franchisee has simply abandoned the location. There may be another way to have those marks removed, without having to sue the franchisee.

Christopher Yetka Authors Insurance Insight Series on the Larkin Hoffman Real Estate and Construction Blog

Christopher Yetka's Insurance Insight Series focuses on common insurance issues that are faced by businesses, including who should be included as insureds, common exclusions and how to avoid gaps in insurance coverage.

James Sander Authors Protecting Payment Blog Series on the Larkin Hoffman Real Estate and Construction Blog

James Sander's Protecting Payment series focuses on the means and methods businesses in the construction industry use to protect their right to payment. He touches on issues of contracts, collections, construction liens and the corresponding interests of the developers and property owners who build.

Small Business Reorganization Act: Game Changer for Small Businesses?

On February 19, 2020, the Small Business Reorganization Act and related interim Bankruptcy Rules go into effect. Congress passed the SBRA with the intent of making Chapter 11 reorganization available to small businesses who were previously priced out of the option. The bulk of the SBRA is codified into a new subchapter V of chapter 11 at 11 U.S.C. §§ 1181­-95 (2020).

New Required Franchise Disclosure Document Cover Page(s)

Beginning January 1, a new cover page, or series of pages, is required for Franchise Disclosure Documents used in the United States. The change is currently in effect for would be franchisors that file an initial application and is effective for existing franchisors when they next file an amendment or renewal application.

What Franchisors Need to Know About the California Consumer Privacy Act Effective January 1st

California’s new data privacy law, the California Consumer Privacy Act (“CCPA”), took effect on January 1st and may require franchisors and franchisees to update or add new data privacy policies and systems to mitigate the significant risk of monetary damage imposed by the new law. Any franchisor operating or franchising (or planning to operate or franchise) in California should examine whether the CCPA may apply and, if so, take the appropriate steps to ensure compliance and minimize the risk of a data breach. The CCPA, which regulates the collection and sharing of data about California residents, applies to any franchisor doing business in California who satisfies any of the following thresholds: (i) annual gross revenues of $25 million or more; (ii) buys, receives, sells, or shares personal information of at least 50,000 California residents, households or devices annually; or (iii) derives a minimum of 50% of annual revenue from selling California residents’ personal information. These thresholds must be satisfied by a sole entity and the statute’s terms do not permit aggrieved consumers to combine franchisor and franchisee revenue to satisfy the threshold requirements. Franchisors should be cautioned, however, that aggressive consumers and their counsel may take advantage of certain vague definitional terms to push for a broader, but misguided, construction covering the entire franchise system.

Can a “Pay If Paid” Clause Bar Lien and Bond Claims in Minnesota?

Legal and Communication Strategies in the Age of Outrage

Washington State Investigating Use of No-Poaching Provisions in Franchise Agreements

The State of Washington has started issuing Civil Investigative Demands (“CIDs”), requiring franchisors to provide information on their use of no-poaching provisions in Franchise Agreements. By the end of this year, if not sooner, all franchisors offering franchises in Washington, or having franchisees in Washington, should expect to receive a CID.

Does Your Square Peg Not Fit into a Round Hole? Consider the Discretionary Exemption

Compliance with state franchise registration and disclosure laws can be expensive and time consuming. As such, putative franchisors and fran­chisors alike often seek to identify an exemption or exclusion from the applicable law in hopes of being able to avoid the registration and disclosure provisions of the law. Unfortunately, sometimes the proposed franchisor or franchise transaction does not fit into a typical exemption, or the state lacks an applicable exemption. But one exemption, often trailing at or near the bottom of a state’s list of exemptions—and often overlooked—is the so-called “discretionary exemption,” an exemption in the public interest, or exemption by order or rule.

Recent Litigation Developments: Arbitration, No-Poaching, and Post-Term Non-Competes

We noticed a few interesting cases this summer regarding the dismissal of no-poaching claims, the enforceability of arbitration agreements, and post-term covenants not to compete.

SCOTUS: Objectively Reasonable Standard Applies to Discharge Violations

In Taggart v. Lorenzen, 139 S. Ct. 1795 (2019), the Supreme Court established the threshold for determining whether a creditor can be held in contempt for violating a bankruptcy discharge as whether the creditor had an objectively reasonable basis for concluding that its actions were lawful.

Exactly Who is Insured Under Your Insurance Policy?

“Exactly Who is Insured Under Your Insurance Policy?” Larkin Hoffman Real Estate and Construction Blog, August 21, 2019

Decline in Value of Cash Collateral Subordinates DIP Loan Lien Rights

In Welty v. Callidus Capital Corp. (In re Midwest Asphalt), Adv. No. 18-04022 (Bankr. D. Minn. Mar. 29, 2019), the bankruptcy court held that the plaintiff successfully preserved his debtor-in-possession loan lien rights in assets sold in an 11 U.S.C. § 363 sale. However, the court found that the debtor’s cash collateral declined in value enough that the plaintiffs’ lien rights were subordinate to those of the secured creditor and purchaser of those assets.The defendant had a pre-petition security interest in various assets, including the debtor’s cash collateral (cash, inventory, and accounts receivable).

Minnesota Court of Appeals Confirms Actual Use, Not Historical Use, is What Matters for Legal Nonconforming Property

Uses of commercial property change over time. As commercial landowners well know, the right to use property as one wishes is subject to and limited by municipalities’ police power in regulating land use. One way Minnesota municipalities regulate permitted uses of land is through zoning. Provided it is exercised lawfully, municipalities generally have the authority to modify land use through changing zoning definitions and rezoning parcels altogether. When this occurs, a use which was previously a permitted use for a parcel can become an unpermitted use for the same parcel.

Inverse Condemnation Can be a Powerful Property Owner Remedy For Damage or Destruction of Property Value by Governmental or Utility Company Actions

Inverse condemnation can be thought of as condemnation in reverse. In a condemnation proceeding, the acquiring authority exercises its power of eminent domain by first offering to purchase private property needed for a public purpose; if no meeting of the minds can be reached with the property owner, then the acquiring authority has the power to take the property through condemnation proceedings in court that determine the “just compensation” to be paid to the property owner for the private property rights that were taken.

The United States Supreme Court's Decision in Obduskey v. McCarthy May Change Debt Collection Requirements For Minnesota Mechanic's Lien Notices

Lawyers who record mechanic’s liens cannot afford to ignore the Fair Debt Collection Practices Act (“FDCPA,” or “Act”). It may only impact an occasional part of an attorney’s lien practice, but the FDCPA is all the more dangerous for not being top of mind. FDCPA lawsuits can be expensive and corrosive to client relationships. In particular, the Act provides for the recovery of attorneys’ fees for plaintiffs. (15 U.S.C. §1692k(a),(d).)

Insurability of Punitive Damages in Minnesota

“Insurability of Punitive Damages in Minnesota,” Insurance Law Deskbook, Chapter 9 (Minnesota CLE, 2019)

E-Alert - Minnesota Enacts New Wage Theft Laws and Employee Notice Requirements

The Minnesota legislature passed sweeping new amendments to statutes which create criminal penalties for the failure to pay wages and impose requirements for employers to document the terms of employment with their employees.

Lessor Beware

Bryan Huntington’s article, “Lessor Beware” was published in the May 2019 edition of Bench and Bar magazine. The article examines the trend that recent federal court decisions seem to favor a willingness to hold commercial landlords liable for their tenants’ trademark infringement.