New Can-Spam Rules Clarify Proper E-Mail Practices
The Federal Trade Commission's (“FTC”) new rule provisions under the CAN-SPAM Act for e-mail marketing are being implemented by most companies without a hitch, according to Linda Goodman, principal, The Goodman Law Firm (San Diego). The new rules were published on May 12, and they went into effect on July 7.
Franchisors must be alert to their increased obligations under the new rule when they are designated as the “sender” of a commercial e-mail advertisement, even when multiple advertisers are on the e-mail. “A franchisor sending an e-mail on behalf of its franchisees nationally or in a region might be the designated sender,” said Goodman. “This can be good news for a franchisor because it can exercise control over all the compliance issues. But the flip side is that the FTC has made it clear that if you are doing commercial e-mail, you as the advertiser will be on the front line of responsibility for the accuracy of the message and compliance.”
Good marketing practices have dictated that companies take responsibility for commercial e-mail sent out on their behalf by third parties, but Goodman said the new rules put more legal force behind it. “The FTC wants to know who the sender is, which entity is the advertiser of the product or service ' so you need to make sure that a third-party marketer is scrupulous and you pre-approve the messages that are being sent,” she said. “Franchisors should remember that they are probably easier to locate than the marketer and probably have deeper pockets.”
The new CAN-SPAM rules also make e-mail opt-outs easier than before. They prohibit charging an e-mail recipient a fee or requiring information besides the recipient's e-mail address. However, Goodman noted that “simplicity in opt-outs has been standard for a couple of years now.”
Rhode Island Legislature Amends Fair Dealership Act
Amendments to the Rhode Island Fair Dealership Act (“RIFDA”) became law in early July. The amendments resolved some concerns expressed by franchisors when the Act was passed in July 2007, yet satisfied franchisees that the key protections in the RIFDA will remain in force.
When the Act was passed last year, attorneys called it the first new franchise relationship law in the U.S. since 1992 and wondered whether it would signal an interest in similar legislation in other states. They also suggested that franchisees would use the RIFDA to more vigorously fight terminations. Neither trend has come to pass yet.
“The International Franchise Association (“IFA”) is pleased with recent steps taken by the Rhode Island legislature to restore the state's friendly business climate to franchised small businesses by removing unnecessary regulation from the franchisor/franchisee relationship. The changes to the Fair Dealership Act included in SB2592/HB8150 put trust back into the franchisor/franchisee relationship by removing the assumption of ill will under current law,” said Troy Flanagan, IFA's director of government relations.
“The legislation removes the litigiously vague term 'good cause' and allows the agreed-upon contract between the two parties to remain as the guiding document,” Flanagan continued. “The unsubstantiated claim of 'franchisor superiority' was removed from current law, recognizing that many franchisors are in fact small, but growing, businesses themselves.”
Franchisees were relieved that the RIFDA remained basically intact. “This law attempts to level the playing field, as it were, giving franchisees rights to cure certain defaults, thus avoiding contract termination,” said Mark A. Dubinsky, president of the Dunkin' Donuts Independent Franchisees Association, in a press statement. “We hope other states and even the federal government will look at the Rhode Island law and realize that passing similar legislation would serve the best interests of all small business owners.”
The amended RIFDA now requires a franchisor to give a franchisee 60 days' notice of violations of the franchise agreement and 30 days to cure the problem before termination (with a 24-hour cure period for health violations). These deadlines are shorter than in the original legislation that passed last year.
