Franchise and Distribution Law Update Fall 2010


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Fall 2010 E-ALERT

Updates for Franchisors:


Reminder: New York Tax Law Affects Franchisors

Last year, New York enacted legislation that imposed new tax filing obligations on certain franchisors whose franchisees pay sales tax in New York.  Recent correspondence from the State of New York has indicated filings have only been received from approximately 400 franchisors, of the thousands that currently have franchisees doing business in New York.

The legislation applies to franchisors based in New York, and to out-of-state franchisors that have at least one franchisee that pays New York sales tax.  The law mandates that covered franchisors file an information report annually with the state, containing certain specific information about its franchisees paying sales tax in New York.  Read more...


U.S. Census Bureau Releases Franchise Data

The U.S. Census Bureau has released the 2007 Economic Census Franchise Report, which is the first comprehensive and detailed report released by this agency which includes information on the role of franchising in the economy.  The inclusion of this data in the latest report has been a focus of the International Franchise Association, as previous census information only included information on franchising in limited-service and full-service restaurants. Read more...

New Maryland Delivery Requirements to Go Into Effect
Amendments to the State of Maryland’s Franchise Registration and Disclosure Law are set to go into effect on October 1, 2010.  These amendments make delivery requirements under this law consistent with the FTC’s Amended Franchise Rule.  The new law does away with the first personal meeting requirement, and franchisors will be required to deliver a disclosure document 14 calendar days before the prospective franchisee’s execution of an agreement or payment of consideration, or upon the reasonable request by a prospective franchisee. 


By now, our clients should have received from us the required updates to their Franchise Disclosure Document as a result of these amendments.  Contact a member of our Franchise and Distribution practice group with any questions.

FDA Seeking Comments to New Federal Menu Labeling Requirements

The U.S. Food and Drug Administration recently released new federal draft guidance documents on the implementation of Section 4205 of the Affordable Care Act, the long-awaited federal menu labeling law.  Read more...

International Update: New Brunswick Adopts Franchise Legislation
The province of New Brunswick has joined the provinces of Ontario, Alberta and Prince Edward Island in adopting pre-sale disclosure legislation for franchises sold in New Brunswick.  The New Brunswick Franchises Act and corresponding regulations will go into effect on February 1, 2011, and will require franchisors to provide prospective franchisees with a disclosure document prior the sale of a franchise.  Read more...


Featured Franchisor:


NOVUS Franchising, Inc.
Located in Savage, MN, NOVUS Glass is known around the world as the premier provider of quality auto glass repair and replacement. As the inventor and pioneer of windshield repair, NOVUS strives to be the glass industry’s research & development leader.  Read more...




Fittante Nominated as Chair of the ABA Forum on Franchising

The American Bar Association's Forum on Franchising Nominating Committee has nominated Joe Fittante as the Chair of the Forum for a two year term, commencing in August 2011.  In this position, Joe will lead the Forum, which is considered the preeminent legal organization on franchising, comprised of approximately 2,000 lawyers from around the world.  The formal election of officers will take place next month at the Forum’s Annual Meeting. 


 Bauer and Klaus Present to National Concierge Association in Washington D.C.

Cyndi Klaus and Meredith Bauer presented a seminar entitled “Understanding Contracts: Making Them, Living With Them,” at the annual conference of the National Concierge Association in Washington D.C.  As part of the presentation, Meredith Bauer focused on important provisions in services contracts, vendor agreements, nondisclosure agreements and noncompetition.  Cyndi Klaus then outlined considerations in enforcing and resolving disputes under these types of agreements.


Modell and Fittante Named to 2010 Super Lawyers List; Modell Listed in Top 100

Chuck Modell and Joe Fittante were selected as SuperLawyers® in Minnesota in the area of franchise/dealership, and were also specially recognized in the July/August 2010 Super Lawyers Corporate Counsel Edition.  In addition, Chuck Modell stood out as the only lawyer representing franchisors that was named to the Top 100 of all Minnesota lawyers.


The Super Lawyers list is comprised of the top 5% of attorneys in each state, as chosen by their peers and through independent research. The selections for Super Lawyers are made by Thomson Reuters. The selection process includes a statewide survey of lawyers, independent evaluation of candidates by attorney-led research staff, a peer review of candidates by practice area, and a good-standing and disciplinary check.


Klaus and Bauer Published in the LJN’s Franchising Business & Law Alert

Cyndi Klaus and Meredith Bauer published an article in the September edition of LJN’s Franchising Business & Law Alert, discussing three recent decisions that affect the franchise industry.  The article highlights a recent decision from the State of Minnesota District Court that found there is no absolute right to rescind under the Minnesota Franchise Act for technical disclosure violations.  In the case discussed, the court found that the franchisor’s failure to be registered in Minnesota at the time a sale was made was a technical violation of the law. 


In addition, the article highlights a case in which the franchisor was held to have properly terminated a franchise agreement, even when the franchisee disputed the amounts owed to the franchisor that constituted a default of the franchise agreement.  Importantly, the court found that the franchisee should have taken some action to either cure the default (such as pay undisputed amounts), or apply to the court for a declaratory judgment on the issue. 


Perrin Attended IFA’s 11th Annual Public Affairs Conference

On September 13-14, Larkin Hoffman’s Andrew Perrin attended the International Franchise Association’s 11th Annual Public Affairs Conference in Washington, DC.  During this two-day event, Perrin had the opportunity to meet with federal lawmakers regarding issues of concern facing franchisors in today’s environment.  Perrin is a member of the IFA’s Franchise Congress and Immediate Past Chair of the IFA’s Supplier Board.  With questions about the event or issues discussed, contact Andrew Perrin at 952-896-3394.


Upcoming Events:


Fittante and Modell to Present at the 33rd Annual ABA Forum on Franchising

Chuck Modell and Joe Fittante are scheduled to present at the 33rd Annual ABA Forum on Franchising, October 13-15, 2010.  Chuck Modell will present "Advanced Disclosure Issues: Pushing the Envelope," and Joe Fittante will present on “Unique and Often Overlooked Provisions of State Franchise Registration and Disclosure Laws.”


Larkin Hoffman Sponsoring Health Care Seminar: “Emergency Relief for Health Care Confusion”

Are you confused about whether your plan is "grandfathered" or even what that means?  Are you facing large premium increases?  Do you know if your business is eligible for a health care tax credit?  Have you put in place the necessary changes for 2011?  This session will provide practical answers to these and other pressing questions you might have regarding health care reform.

It will be held on September 28, 2010 from 8:00 to 9:30 a.m., at our offices. 


IFA Webinar: “How To Grow Your Business by Increasing Customer Loyalty”

The next WednesdayWise Webinar sponsored by the IFA Supplier Forum will take place on Wednesday, October 6, from 1-2 p.m. CT.  

Recent Successes


Larkin Hoffman Obtains Judgment Enforcing an Out-of-State Mediation Provision Under California Law

A number of years ago, we recommended to our clients that they include a mandatory mediation provision in their franchise agreements. The clause requires both parties to engage in at least four hours of mediation, typically at a neutral site selected by the mediator, before they can file a lawsuit.  Read more...


Larkin Hoffman Obtains Summary Judgment on Warranty Claims on Behalf of a Manufacturer Client

Larkin Hoffman attorneys James Susag and Julia Halbach obtained a favorable summary judgment decision from the Federal District Court for the Western District of Wisconsin on behalf of a marine manufacturer client, Godfrey Marine.  This decision is significant in several respects, including its analysis of plaintiff’s warranty claims, and its analysis of the claims made against Godfrey Marine under the Wisconsin Fair Dealership Law and the Wisconsin Franchise Investment Law.  Read more...


Our Practice

For more information about Larkin Hoffman’s Franchise and Distribution practice group, visit our homepage by clicking here.

Contact our Larkin Hoffman Franchise and Distribution group members: 


Email 952-896-3341

Email 952-896-3256

Email 952-896-1578

Email 952-896-1572


Cynthia M. Klaus

Email 952-896-3392

Pamela N. Merkle

Email 952-896-3337

Meredith A. Bauer

Email 952-896-3263


Email 952-896-3280

Andrew F. Perrin

Email 952-896-3394

Edward J. Driscoll

Email 952-896-3235