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To Disclose or Not to Disclose?
Financial performance representations (“FPRs”), formerly referred to as “earnings claims,” have generated extensive discussion since franchise sales first became regulated in 1970. FPRs are, in plain English, projections of how a franchise might perform financially or historical financial performances. Most commentators on this subject note that such financial information is likely the first item a prospective franchisee will ask for in its discussions with a franchisor. However, federal and state government officials have steadfastly refused to make disclosure of this information mandatory. A franchisor has the right not to disclose any financial performance information in its negotiations with prospective franchisees. However, if a franchisor does elect to give this information to prospects, that information must be included in the franchise disclosure document (“FDD”) the franchisor is required to give to prospective franchisees, and cannot be false, misleading, or omit any information necessary to make it not misleading.
Around 1970, when franchise regulation was first developing in the United States, very few franchisors, perhaps only 10% to 20%, made any financial performance representations to their prospects. They declined to do so for various reasons: the rules were very strict as to what could be disclosed; franchisors did not always have access to the data necessary to create an FPR; franchisors feared suits from prospective franchisees; and, in some franchise systems, the FPR would not have shown prospects a hopeful picture. The rules governing FPRs have been simplified over the years, but, still, only around 40% of franchisors elect to create FPRs.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.