Recent Blog Posts
- New Jersey Legal Update Podcast - # 74
On Wednesday October 1, 2008 Adam J. Siegelheim, member of Stark & Stark's Franchise group, Nathan R. Greenberg, President and COO of Siegel Financial Group LLC, and Don Johnson, President of Diamond Financial Services met at the IFA's New Jersey Franchise Business Networking meeting to discusses the latest trends impacting the franchise industry. Mr. Siegelheim, Mr. Greenberg and Mr. Johnson discussed the recent economic climate in relation to the franchise industry, and what this will mean in the future for franchisors. You can download the full podcast here. (7.7 MB) .... - Insolvency in Franchise Businesses: Minimizing Risk and Maximizing Recovery Under the Bankruptcy Code
Timothy P. Duggan, Shareholder and member of Stark & Stark's Bankruptcy & Creditor's Rights group, will present a seminar entitled Insolvency in Franchise Businesses: Minimizing Risk and Maximizing Recovery Under the Bankruptcy Code in conjunction with the Legal Publishing Group of Strafford Publications. The 90-minute tele-seminar will be held Thursday December 4, 2008 from 1:00 PM - 2:30 PM. The seminar will feature a discussion of the weakening economy and it's effects on many franchises, ranging from restaurants to convenience stores to staffing services who are now seeking bankruptcy protection. The Bankruptcy Code addresses how franchise agreements are treated in bankruptcy; however, the Code does not resolve all of the unique issues that arise for franchisors and franchisees. It is critical that franchise counsel develop strategies to anticipate and protect against the fallout from bankruptcy. This teleconference will highlight key legal issues that arise during a .... - State Committee takes a first look at the "Mobile" Franchise Bill
Bill A2491, which was originally filed in March 2008, was “introduced” on Thursday October 23, 2008 and then referred to the Assembly Commerce and Economic Development Committee on Friday October 24, 2008. It will likely have a “second reading” before proceeding in the substantive legislative process. Members of the International Franchise Association gave a thorough argument against the bill, despite some tough questioning by the Committee members. I also gave some brief testimony on the technical aspects of the proposed bill. The fight against this bill is just beginning – and since passage of this bill could have a chilling effect on all types of franchising in New Jersey – this is a fight the franchising community needs to win. .... - Bankruptcy: Who's next in line?
Adam J. Siegelheim, member of Stark & Stark's Franchise group, was quoted in the article Bankruptcy: Who's next in line? in the October 2008 edition of Franchise Times. Mr. Siegelheim comments on the recent trend of franchise bankruptcies among large restaurant systems. Mr. Siegelheim discusses the impacts these recent bankruptcies have had on the franchise industry as a whole, as well as what this could mean for franchisees and franchisors in the future if this trend continues. You can read the full article here (PDF). .... - New Franchise Disclosure Laws
Adam J. Siegelheim and Cary S. Kvitka, members of Stark & Stark's Franchise group, will present a webinar entitled New Franchise Disclosure Laws in conjunction with the New Jersey Institute for Continuing Legal Education. The webinar will be held Wednesday November 12, 2008 from 12:00 PM - 1:15 PM. The webinar will focus on the newly revised FTC Franchise Rules, which require that all franchisors provide for certain disclosures to prospective franchisees. Under the new rules, a franchisor is now required to file basic information about the franchisor, the franchised business, and the franchise agreement. Mr. Siegelheim and Mr. Kvitka will review the recent trends in franchise law, and will discuss the impact of the new law on the preparation of disclosure documents, franchise agreements, and state registrations. You can access additional information and a registration form here. .... - "Mobile Franchise" Act Moves One Step Closer to Passage
The “Mobile Franchise” Act has been scheduled for a legislative session on October 23, 2008 at 2:00 p.m. The session will take place in front of the Commerce and Economic Development Committee, Room 9 on the Third Floor of the State House Annex located in Trenton, New Jersey. As I mentioned in a previous blog post: House Bill 2491 and Senate Bill 1539 of the New Jersey Legislature seek to expand the type of franchises, which are subject to the New Jersey Franchise Practices Act. In general, the New Jersey Franchise Practices Act currently applies to franchises where: 1) the franchisor has granted the franchisee a license, mark, trade name, etc.; 2) there is a “community of interest” in the marketing of goods and services; 3) where the franchisee has established or maintains a “place of business” in New Jersey; 4) where the gross sales between franchisor and franchisee are more than $35,000 in the prior year; and 5) more than 20% of the .... - Buying an Existing Business -- What to Consider
Cary S. Kvitka, member of Stark & Stark's Business & Corporate and Franchise groups, authored the article Buying an Existing Business — What to Consider for the September 2008 issue of Mercer Business Magazine. Mr. Kvitka discusses the risks associated when opening a business - whether it is your first business or you are an established business owner looking to expand into a new market. Mr. Kvitka advises business owners to make sure that the transaction is properly structured, that you’ve exhaustively investigated the target business, and that the contract for sale is properly drafted. You can read the full article here (PDF). .... - What Franchisors Can Expect in Bankruptcy
In light of the recent high profile bankruptcy filings of dining establishments such as Bennigans and Steak N Ale, Adam Siegelheim leads a discussion with Bankruptcy & Creditor’s Rights Attorneys Timothy Duggan and Thomas Onder to outline what franchisors need to understand about the bankruptcy process. In this podcast the franchise and bankruptcy attorneys discuss: what happens to the franchise’s intellectual property assets; what are the responsibilities of the franchisees; how does the bankruptcy filing impact the restrictive covenants which exist and how do potential third-party purchasers of the system come into play. You can download the full podcast here. (10.3 MB) .... - The Franchise Relationship: Trends in the Law
Adam J. Siegelheim, member of Stark & Stark's Franchise group, was a participant in the June 2008 franchise roundtable for GC Mid-Atlantic Magazine, titled The Franchise Relationship: Trends in the Law. The panelists discussed topics related to the franchise industry including a discussion on the difference between a franchise and a license, what are the most common factors in disputes that arise among franchisors and franchisees and tips on how to how handle dispute resolution issues in a franchise agreement. You can read the full article here. .... - Vermont House Bill Which Would Have Rendered Non-Competes Unenforceable Does Not Pass
In a previous blog post I discussed House Bill 790 in Vermont which would have had a substantial negative impact upon franchising in Vermont. It would essentially void non-compete provisions in franchise agreements. The Bill apparently languished in committee through the end of the May session, which effectively kills it for the time being. The danger of such bills is that they tend to leach into “sister” states. The demise of the Vermont Bill is a positive development for franchisors and helps strengthen the franchise community in general because it protects the general integrity of franchise systems. .... - How To Start A Business
Cary S. Kvitka, member of Stark & Stark's Franchise and Business & Corporate groups, will present a seminar in association with SCORE of Princeton, Counselors to America's Small Business. SCORE offers free and confidential small business advice to help you build your business from idea to start-up to success. The seminar will focus on what you need to know when starting a business. Mr. Kvitka will discuss: The pros and cons of the three options: buying an existing business; purchasing a franchise; or building your own business. Intellectual property issues, such as trademark or copyright concerns. How to negotiate commercial leases and other vendor contracts. You can access additional information, and registration information, here. .... - On Franchising
Adam J. Siegelheim, member of Stark & Stark's Franchise Group, was quoted in the article On Franchising in the May 6, 2008 edition of the Wall Street Journal. The article addresses some of the most common issues facing new franchisors and some new concerns franchisors need to be aware of before starting a franchise of their own. Mr. Siegelheim comments on some of the factors that franchisors need to take into consideration when starting a new franchise, and some tips to ensure the longevity of your franchise concept. You can read the full article on the Wall Street Journal Online (registration required). .... - NJ Legislature to Consider Applying the Franchise Practices Act to "Mobile" Franchises
House Bill 2491 and Senate Bill 1539 of the New Jersey Legislature seek to expand the type of franchises, which are subject to the New Jersey Franchise Practices Act. In general, the New Jersey Franchise Practices Act currently applies to franchises where: 1) the franchisor has granted the franchisee a license, mark, trade name, etc.; 2) there is a “community of interest” in the marketing of goods and services; 3) where the franchisee has established or maintains a “place of business” in New Jersey; 4) where the gross sales between franchisor and franchisee are more than $35,000 in the prior year; and 5) more than 20% of the franchisee’s sales are derived from the franchise. The proposed change in the statute would apply the provisions of the Franchise Practices Act to “mobile” franchises, in other words, franchises that do not have a brick and mortar location. Under the proposed Bill, a “place of business” would include a location .... - Vermont Legislature Introduces Legislation That May Render Non-Compete Provisions in Franchise Agreements
The Vermont legislature introduced House Bill No. 790 on February 1, 2008. The Bill would render non-compete provisions of franchise agreements void unless the franchisor can prove to the Court’s satisfaction that the franchise agreement is: (1) consistent with public policy; (2) necessary to protect the franchisor; (3) not a contract of adhesion; and (4) reasonable considering the subject matter and conditions. Clearly the third requirement is problematic. A “contract of adhesion” is legal-speak for “non-negotiable” and is “take-it-or-leave-it” in nature. Most franchise agreements are non-negotiable because it is important for the system to maintain uniform and consistent standards. However, various courts have deemed franchise agreements to be contracts of adhesion because of the superior bargaining power of the franchisor. Since most franchise agreements are contracts of adhesion, and if this Bill .... - Two Stark & Stark Attorneys Named Legal Eagles in Franchise
Rachel Lilienthal Stark, Shareholder in Stark & Stark's Franchise group, and Adam J. Siegelheim, member of Stark & Stark's Franchise group, have been named Legal Eagles in the franchise industry by Franchise Times Magazine. Legal Eagles are chosen annually from hundreds of nominations across the country. Legal Eagles are recognized for their strong reputations among their peers, an active involvement in the franchise community through organizations such as the International Franchise Association and the American Association of Franchisors, and their experience and expertise in the franchise industry. Rachel Lilienthal Stark concentrates her practice in the representation of start-up and emerging franchisors on a variety of issues including compliance with all federal and state regulations, disclosure documents, acquisitions and financing. Adam J. Siegelheim focuses his practice in the representation of franchisors in various matters, including the preparation of disclosure .... - New Jersey Legal Update - Podcast # 73
This week's Franchise Law podcast is an interview with the Vice President of Franchisee Development for Huntington Learning Center, Tom Spadea. The interview took place at February's 2008 International Franchise Association's Annual Convention in Orlando, Florida and discusses franchise development and recruitment strategies, the new Franchise Disclosure Document, and a discussion on how to train your employees on policy and procedure updates. This week's Franchise Law Podcast is presented by Adam J. Siegelheim of Stark & Stark's Franchise group. You can download the New Jersey Legal Update podcast #73 here (8.6 MB) .... - New Jersey Legal Update - Podcast # 72
This week's Franchise Law podcast is an interview with the President of MFV Expositions, Tom Portesy. The interview discusses the growing rate of franchises in and outside of the United States and what this means for the future of the franchise industry. The interview took place at the 2008 Franchise Expo South, held earlier this month in Miami Beach, Florida. This week's Franchise Law Podcast is presented by Shareholder of Stark & Stark's Franchise Law Group, Adam J. Siegelheim. You can download the New Jersey Legal Update podcast #72 here. (3.6 MB) .... - New Jersey Legal Update - Podcast # 71
This week's Franchise Law podcast is an interview with Chief Franchising Officer of Hollywood Tans, Steve Beagelman. The interview took place at the 2008 Franchise Expo South, held earlier this month in Miami Beach, Florida. This week's Franchis Law Podcast is presented by Shareholder of Stark & Stark's Franchise Law Group, Adam J. Siegelheim. You can download the New Jersey Legal Update Podcast # 71 here. (6.8 MB) .... - New Jersey Legal Update - Podcast # 70
This week's New Jersey Legal Update podcast will discuss the necessary insurance coverage needed for franchisors in order to protect your franchise system against claims. This podcast will address good practices to follow when determining your level of insurance, as well as a discussion on industry standards and the various types of coverage available to you and your business. This week's New Jersey Legal Update is presented by Adam J. Siegelheim, a member of Stark & Stark's Franchise Group. You can download the New Jersey Legal Update Podcast # 70 here. (6 MB) .... - At Will Employment Alive and Well in the Franchise Context
In a recent unpublished decision by the New Jersey Appellate Division, known as Ashwall and Winograd v. Prestige Management Services, Inc., et als. (Decided October 16, 2007), the Court dealt with a claim by employees of a New Jersey automobile dealership franchise who claimed religious discrimination and “promissory estoppel” against their former employer. The Plaintiffs, a manager and top-salesman, claimed discrimination based on their religious faith (Judaism) under the New Jersey Law Against Discrimination. One of them had also claimed that, since he had been given the task of turning a non-profitable dealership “around,” that he was entitled to employment for at least a reasonable period of time. His argument was that he had been a very successful manager of another dealership, and by asking him to take on the management of a non-profitable dealership, the franchisee in effect “owed” him employment for a certain period of ....
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