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A recent unanimous ruling by the United States Supreme Court has brought clarity and certainty to previously murky questions regarding enforcement of forum selection clauses in federal court. In Atlantic Marine Construction Co. v. U.S. District Court, 187 L. Ed. 2d 487 (2013), the Court established that a party seeking to enforce a forum-selection clause and transfer a lawsuit to another federal court should file a motion to transfer venue under 28 U.S.C. § 1404. The Court also established that, absent extraordinary circumstances clearly disfavoring a transfer, a valid forum-selection clause should be enforced. Read more . . .
This just may be the year when New York changes its franchise law. The New York State Bar Association (NYSBA) voted in November 2013 to make franchise law reform one of its priorities for the 2014 legislative session, which begins in January and ends in June. The proposed changes in the law are geared not only toward conforming New York’s law to the Federal Trade Commission’s franchise regulation, but also toward eliminating provisions that discourage franchisors from locating their headquarters in New York. Read more . . .
The American Arbitration Association’s (AAA’s) newly-revised Commercial Arbitration Rules became effective on October 1, 2013, for arbitrations filed on or after that date. The revised rules include several substantive changes. Given the prevalence of arbitration provisions incorporating these rules in franchise and distribution agreements, the revisions are important for franchise and distribution practitioners to know and understand. Litigators will need to be familiar with the changes as they work through disputes to be arbitrated under the new rules, and transactional lawyers will want to take careful note of the changes as they decide whether to continue to incorporate AAA arbitration in the agreements they negotiate. Five general changes in the rules warrant particular discussion. Read more . . .
Franchise systems that rely on international master or development agreements to export their business concepts must expect to negotiate terms in almost every facet of the relationship, including territory, development schedule, royalty splits, choice of law, venue, and means of dispute resolution. What they may not expect, however, is that when they negotiate with parties in countries grounded in the civil law, they may be charged with a duty of good faith not only in the final contract, but in the contract negotiations themselves. Read more . . .
Trade secret protection ensures that mouths will continue to water with the secret spices of Colonel Harlan Sanders. The guru of Kentucky Fried Chicken carefully guarded his secret blend of eleven herbs and spices, and few would question the propriety of treating such a recipe as a trade secret. But modern franchise agreements often purport to bring much more information under the umbrella of trade secret protection. Are such trade secret provisions enforceable? Or are they unenforceable as overreaching by franchisors? Read more . . .
Renewal of the term of a franchise agreement provides an opportunity for the franchisor and franchisee to evaluate their relationship and determine whether the relationship should continue. Franchise agreements typically contain conditions the franchisee must satisfy to renew, which the franchisor treats as consideration for the renewal. Among these are: the absence of uncured defaults; the franchisee’s execution of the then-current form of franchise agreement being offered to new franchisees; the franchisee’s payment of a renewal fee; and the franchisee’s remodeling or refurbishing of its location to meet the franchisor’s current standards. This article focuses on another renewal condition often required by franchisors: the franchisee’s release of any legal claims against the franchisor. Read more . . .
If you could wave a wizard’s wand and add or remove one provision of your franchise agreements, what would it be? Inspired by the ABA Forum on Franchising’s last plenary session, “If I Had a Wizard’s Wand,” and drawing on roundtable discussions at last year’s IFA Legal Symposium, the authors report below how franchisor and franchisee lawyers have answered this question. The contract additions franchisor lawyers wished for most were provisions to improve administration of the franchise system, resolve disputes, and facilitate terminations and non-renewals. The additions franchisee lawyers wished for most concern purchasing requirements, post-termination non-competes, franchisor “sole discretion” provisions, disclaimers, and transfer fees. Read more . . .
For corporate counsel, it is that time of year once again – time to focus on how to effectively and efficiently manage the Franchise Disclosure (FDD) process. Most corporate counsel know the federal and state laws that dictate what information is included in the FDD, but do we really know how to efficiently assemble that information into a cohesive, sales-friendly FDD that also serves and satisfies our internal clients? When I first started out, I thought that all I needed was a copy of the laws, compliance guides, and FAQs. Over time, I discovered that producing an FDD I could be proud of, and my clients could be happy with, involved much more than that. To achieve your ultimate goal – happy clients with a legally compliant FDD in hand – I recommend that you follow the following six pointers. Read more . . .
The 36th Annual Forum on Franchising Meeting was held in Orlando, Florida, this past October. We had 820 attendees, so this marked one of the best-attended forums ever! The intensives, workshops, and plenaries covered thought-provoking and practical topics and were wonderfully executed by our diverse and accomplished speakers. The social events were relaxed and family-friendly. Our thanks again to program co-chairs Diane Green-Kelly and Eric Karp, who did such a terrific job in Orlando! Jim Goniea and Will Woods, the program co-chairs for Seattle, and the rest of the Forum governing committee are hard at work developing what promises to be a great annual meeting in Seattle. The meeting will be held October 15-17, 2014, at the Sheraton Seattle Hotel in downtown Seattle, Washington. Read more . . .
This issue of THE FRANCHISE LAWYER showcases the rich pool of talent within our Forum on Franchising, with articles on a wide range of topics written by a diverse group of authors. Much is happening on the franchise law front, as you will see. Read more . . .
I have been attending the ABA Forum on Franchising for nearly a quarter of a century. Many may consider me to have a substantial amount of franchise experience and, therefore, less to gain by continuing to attend, compared to newer members. But the more Forums I attend, the more I believe I must continue to attend each year. As a franchisee lawyer greatly outnumbered by franchisor lawyers and executives at the Forum, I find it even more important to openly express to the bar the franchisee’s perspective on franchisor-franchisee relationship issues. Read more . . .