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Observations on Negotiating Franchise Agreements in Today's Legal Environment
Franchise law has long characterized franchise agreements as adhesion contracts (see, Ticknor v. Choice Hotels Int'l, 265 F.3d 931 (9th Cir. 2001) (Montana law); Bolter v. Superior Court, 87 Cal. App. 4th 900 (2001) (California law)). While no empirical data exist on the percentage of franchisors that will negotiate the terms of their franchise contract with prospective franchisees, it is fair to conclude that they remain a minority. To start the pre-sale disclosure process, a franchisor must present a prospect with the terms of its bona fide offer for the sale of a franchise. Frequently, these are the only terms the franchisor is prepared to accept.
Franchisors resist prospective franchisee efforts to negotiate better terms for themselves for any number of reasons. Some franchisors have no incentive to negotiate: Enough prospects are ready to buy a franchise on the franchisor's economic terms. Some franchisors offer their franchises on a strict 'take-it-or-leave-it' basis to avoid the administrative burden of managing a network of diverse contracts. Other franchisors eschew negotiating to avoid the possible fallout from charges of favoritism or to simplify the paperwork burdens associated with franchise sales. Some franchisors hide behind the extra disclosure duties that arise from contract negotiations by perpetuating the impression that franchise laws forbid franchisors from negotiating changes to their standard deal, which, of course, is untrue. Franchise laws do not forbid franchisors to negotiate franchise agreements, and franchise regulators do not intend for pre-sale disclosure rules to discourage contract negotiations. Nevertheless, the prevailing public perception is that franchise agreements are non-negotiable (see, for example, http://franchises.about.com/od/franchisinglegalissues/f/Fran_negotiate.htm, as of Dec. 10, 2006).
This is not to say that franchise contracts are never negotiated by franchise parties. In many situations, the franchisee enters the scene with negotiating leverage, whether due to a new franchisor's eagerness to close its first few sales or the prospective franchisee's particular experience, relative size, willingness to open up a new market, scope of investment, or other special circumstances. The more sophisticated the prospect, the less likely the prospect will be put off by the franchisor's initial resistance to negotiating special terms. As a result, some degree of negotiation is not uncommon particularly in franchise systems requiring larger initial investments that tend to attract more sophisticated buyers.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?