Pennsylvania HB 1620, the "Responsible Franchise Practices Bill"

Pennsylvania HB 1620, known as the “Responsible Franchise Practices Bill”, attempts to bring a balance to the franchisor/franchisee relationship for Pennsylvania franchisees. Pennsylvania, a state that currently does not have a franchise law, has a proposed bill that will have a tremendous impact on the franchise community. The bill attempts to make franchise agreements more equitable and fair.

The stated purpose of the bill is to guaranty fairness in the franchisee/franchisor relationship and eliminate "arbitrariness, coercion, and duress."  The bill poses limitations on a franchisor’s rights to terminate a franchise agreement and the reasons a franchisor may terminate the agreement.  The proposed legislation also poses limitations on a franchisor's right not to renew a franchise agreement. Additionally the bill restricts a franchisor's ability to contractually limit a franchisee’s rights to transfer the franchise, among others. Read more »

Key Takeaways from the Nov 13th PFA Meeting on Recruiting, Hiring & Reducing Turnover of Key Employees

Last month the Philadelphia Franchise Association (PFA) had a terrific meeting at Maggiano's in downtown Philadelphia.  I want to again thank our terrific panelist, Tom Monaghan, Steve Beagelman and Mr. Ade Lawal.  Each brought excellent stories and practical advice on how to recruit, hire and train key employees.

I believe the most insightful part of the presentation was the insistence by all the panelist that the hiring process must be exactly that, a process.  If a company can define what steps it needs to take and then follow those steps they will have a much better chance at being successful than those companies that wing it each time they have a need for a new team member.

Having a defined process will enable companies to refine and improve that process over time.  Key elements to a good process that we discussed were:

- Written and consistent interview questions

- Simple outside and objective tests such as background, IQ, personality test, etc. (I was intrigued to learn that some really helpful tests can be done for very little money) Read more »

Key Commercial Lease Terms

What are the key terms that a prospective tenant of a commercial lease should consider prior to signing a commercial lease? A prospective tenant should consider negotiating the following key terms in their commercial lease: Read more »

Formal Resale Program for Franchisees led by Franchisors

Franchisors many times don’t think about franchisees exiting their system as the opportunity that it really is. Without a formal resale program in place, franchisors can be at the mercy of local business broker, real estate brokers or landlords for the continuity of their locations. When a franchisee is looking to exit the system, they should be embraced and helped in their exit strategy. Many franchisees who want to leave the system are no longer putting forth the effort they they put forth in the first year they opened their doors. By helping a new franchisee take over the location, they can reinvigorate the market and increase their royalty stream from the location. If they aren’t careful, the location can flip to a competitor or just close.

Franchisees should be told that leaving the system is part of franchising and they can help with the transition that will enable them to get a fair purchase price. This is especially true for franchisees that are in trouble and behind in debt or rent payments. By coordinating the efforts and negotiating with the banks and the landlord a potentially disastrous situation can be turned into an opportunity. Read more »

Hot Franchises for Prospective Franchisees

Anywhere I go, when people learn that I am a franchise attorney, they ask me what are the "hot" franchises that prospective franchisees are considering.  My answer is that there are certain categories of franchises that are "hot" right now, but it does not mean they are for every prospective franchisee.  Read more »

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