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Chuck Modell Articles 1990-Present
View a complete compilation of Chuck Modell's articles 1990 - Present
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Could It Really Be Time Already to Amend Your FDD?
Most franchisors completed and filed their franchise disclosure documents in the last ten weeks, and the last thing they will be thinking about is stopping sales to amend that document so soon after renewal. However, under both state and federal law, there is an obligation to amend as material changes occur in the information disclosed in the FDD, and recent events, including COVID-19 and civil unrest, may have created events in your system that require amendment at this time, or could soon require an amendment.
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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.
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Save Your Business: Mediate, Don’t Litigate.
Apart from a public relations nightmare, the single biggest obstacle in the path of a growing company, particularly a small one, is the prospect of a lawsuit.
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Topic 606 – is Your Net Worth (Equity) About to be Decimated?
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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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.
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Determining the Viability of Franchising Your Business
Your franchisees should not be the testing centers for your concept. Although there is no rule that requires it, the likelihood that your franchisees will follow your system improve dramatically when you can show them a successful prototype.
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Item 19 Disclosures Must Now Comply With New Law
The North American Securities Administrators Association (NASAA) Commentary on financial performance representations (FPR), which we have been writing about for the last year, is now the law.
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Inserting Your Client’s Audit Into Their FDD? Stop. Read it.
It is important that you, as the franchisor’s attorney, review your client’s audited financial statements, hopefully before they are finalized. Failure to do so will often result in a mistake in the financial statements, or a mistake in the FDD, either of which can lead to significant liability for your client.
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Changes in Item 19 Disclosure Requirements Take Effect Next Week
We have previously written about the changes required to Item 19 disclosures based upon the adoption in May of the new NASAA financial performance representation (FPR) commentary. If your franchise disclosure document (FDD) has an effective date of May 9 or later, then you only have until next Saturday, Nov. 4, to update the Item 19 disclosures in your FDD.
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Selling Franchises – Do you Have Numbers you can Show to Prospects?
In "Selling Franchises – Do you Have Numbers you can Show to Prospects?" Chuck Modell provides a detailed response to a typical question from a prospective franchisee, "How much can I make?"
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Spotlight: Ed Driscoll
In 1971, Governor Wendell Anderson appointed Edward J. Driscoll as Minnesota’s Commissioner of Securities and Chairman of the Minnesota Commerce Commission, where he was responsible for the regulation of financial service industries, including insurance, state chartered banks, securities, and real estate.
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NASAA Adopts New Rules on Financial Performance Representations
On May 8, 2017, the North American Securities Administrators Association, Inc. (“NASAA”) formally issued new guidance, the NASAA FPR Commentary (the “Commentary”), to clarify what constitutes a reasonable basis in making a financial performance representation (“FPR”)—with specific guidance for a variety of common FPRs that are made in Item 19 of Franchise Disclosure Documents (“FDDs”). The Commentary provides welcome guidance to franchisors that have been reluctant to include FPRs in their FDDs, or whose efforts to include FPRs have been rebuffed by state franchise examiners, but it will ultimately require all franchisors that currently include an FPR in their FDD to revise their FPR.
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SBA Announces Valentine’s Day Changes to SBA Loan Program for Franchises
Yesterday afternoon, the U.S. Small Business Administration (SBA) announced temporary changes to the recently revised franchise review process for its 7(a) and 504 loan programs. The changes are intended to facilitate SBA loans for franchisees of franchise systems who have previously been on the SBA’s Franchise Registry or otherwise negotiated an SBA Addendum to their franchise agreements.
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2017 Checklist for Franchisors: Updating Your FDD
Chuck Modell's article, "2017 Checklist for Franchisors: Updating Your FDD" was published by the International Franchise Association on Jan. 29, 2017.
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Get it in Writing, so a Deal Doesn’t end in Buyer Beware
Chuck Modell contributed the article, "Get it in Writing, so a Deal Doesn’t end in Buyer Beware" to the Dec. 2016/Jan. 2017 edition of Upsize Magazine.
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Show the Numbers to Sell More Units
Chuck Modell's article, "Show the Numbers to Sell More Units" was published in the Sept. 2016 edition of Franchise Times.
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California Franchise Relations Act – Are Your Franchise Transfer Standards Ready to Hand to Franchisees?
In the last issue of this newsletter, Henry Pfutzenreuter wrote a detailed article outlining the recent Amendments to the California Franchise Relations Act (the “CFRA”).[1] The Amendments addressed issues that were already covered in the franchise relationship laws of several other state statutes. Thus, when we went through the franchise filing renewal season, the only change we needed to make to our clients’ Disclosure Documents was to expand the language of the California addenda to confirm our clients would comply with the transfer provisions of the amended law, since the existing version of the CFRA had not addressed transfers. However, as we look to the future, there is one requirement of the CFRA transfer provision that is already keeping franchisors awake at night, and you want to get ahead of the issue.
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Update on Financial Performance Representations (FDD Item 19)
In January each year, Franchise Times features their annual “20 to Watch” in franchising for the year. In addition to listing our long time client, Anytime Fitness, at the top of the list, this year’s list includes the North American Securities Administrators Association’s pending Commentary on financial performance representations as one of the top 20 things or people to watch in franchising in 2016. In our last newsletter, we reported that the Commentary had been issued for public comment. NASAA received extensive comments, and the task force that issued the Commentary has been scheduling at least two conference calls a month to work their way through the comments. What does this mean for franchisors?
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Collect Releases Like you Collected Baseball Cards
Chuck Modell's article, Collect Releases Like you Collected Baseball Cards, appeared in the Fall 2015 edition of The Franchise Lawyer.
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