Focus on Franchising

This posting was written by John W. Arden.

News and notes on franchising and distribution topics:

 The number of state franchise registrations filed by franchisors during the first quarter of 2009 is down by 16 to 22 percent as compared with the first quarter of 2008, according to state franchise regulators. (“Franchise Sales Pull Back During the Recession,” Wall Street Journal, April 28, 2008.) Among the 14 states that require franchisors to register an offering circular prior to selling franchises, three states surveyed by the Journal reported steep declines in the number of filings—Maryland (-16%); California (-20%); and New York (-22%). This does not mean that fewer franchises are being sold; it means only that fewer franchisors are filing for the right to sell franchises in states requiring registration. Bret Lowell, a partner at DLA Piper, indicated that franchisors usually instruct outside counsel to register them in every state—whether or not they have firm plans to sell in all of the states during the upcoming year. In the current economic environment, “they’re being more selective” in the states they choose to maintain registration.

 The International Franchise Association (IFA) will conduct its 42nd annual Legal Symposium on May 17-19, 2009, at the J.W. Marriott Hotel in Washington, D.C. Introduced by IFA President and CEO Matthew R. Shay, the symposium will feature three general sessions and 23 concurrent workshops on a variety of topics. In addition, the symposium will feature a five-part Basics Track to provide a solid foundation in franchise law and a session of roundtable discussions. For further information on the symposium, contact the IFA at (202) 628-8000 or visit the IFA website.

 The Federal Trade Commission will hold a public workshop on June 1 to hear public comment on the proposed changes to the FTC Business Opportunity Rule that were outlined in a revised notice of proposed rulemaking on March 26, 2008. Among the topics open for discussion is the proposed one-page Business Opportunities Disclosure Form that business opportunity sellers would be required to provide to prospective purchasers to help them make informed purchase decisions. The form would include information about earnings claims, litigation, cancellations and refund policies, and references. The workshop will be held from 9 a.m. to 5 p.m. in the FTC’s satellite building conference center at 601 New Jersey Avenue N.W., Washington, D.C. The FTC will accept written comments on topics to be covered in the workshop through June 15, 2009. Further information is available here at the FTC website.