Franchise, Distribution and Licensing Law Committee

Committee Activity in Review

As published in the NY Business Law Journal

WINTER 2017 NY BUSINESS LAW JOURNAL
BANKRUPTCY LAW COMMITTEE

For further information regarding the Committee and its activities or to share feedback and suggestions, please contact Committee Chair Justin M. Klein (justin@markskleincom).

– Justin M. Klein, Chair

summer 2017 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

On May 12, 2017, the Franchise, Distribution and Licensing Law Committee held a meeting in conjunction with the Business Law Section Spring Meeting at the Har­vard Club. At the meeting, Joe Buble and Paul Dailey, tax experts and CPAs with Citrin Cooperman, led a packed room in a discussion entitled: “How the Trump Tax ‘Plan’ Will Affect Franchise, License and Distribution Busi­nesses.” The program included a detailed overview of the Trump Administration’s proposed changes to the tax code. An active discussion among all the attendees and Committee members helped to capture the effect those changes might have on franchise, distribution and license businesses. The response to the meeting was extremely positive and the topic well received. One conclusion that all in attendance could agree on is that there will definite­ly be a need for significant additional discussion once the formal plan is rolled out.

In addition, at the outset of the meeting, the Chair asked the members to provide feedback on the Commit­tee as a whole and requested that members share ideas about future meeting topics and speakers. So far, there have been some excellent suggestions that are presently being explored and are sure to make solid programs. We look forward to additional suggestions and commentary on how we can make the Committee a stronger resource for its members.

For further information regarding the Committee and its activities or to share feedback and suggestions, please contact Committee Chair Justin M. Klein (justin@mark­sklein.com)

– Justin M. Klein, Chair

winter 2016 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

The Franchise, Distribution and Licensing Law Com-mittee continues to provide informative and relevant con-tent to its members. Recently, the Committee co-sponsored a program entitled “Transatlantic Transaction: Minimizing Risk, Maximizing Value.” The program focused on legal issues affecting businesses seeking to expand internation-ally through a variety of different transatlantic transaction-al strategies: franchising, joint ventures, co-branding, and licensing. The panel discussion compared United States and English laws from the litigation and transactional per-spectives, focusing on franchising, retail, and IP. The Com-mittee and its chair are actively working on additional programs for the Spring and Summer 2017. The Commit-tee’s next meeting is scheduled for January 25, 2017 in con-junction with the NYSBA’s Annual Meeting.

– Justin M. Klein, Chair

summer 2016 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

The Franchise, Distribution and Licensing Law Committee had hoped that, over time, it would be able to reach a mutual understanding with the New York State Attorney General’s Office with respect to the proposed modifications to the New York State Franchise Sales Act, originally proposed by our Committee and currently scheduled for eventual consideration by the New York State Legislature. After a hiatus of several months, the Committee’s negotiating team of David Oppenheim, Tom Pitegoff and Richard Rosen, together with Kevin Kerwin, NYSBA legislative liaison, met with representatives of the Attorney General’s office on December 7th, 2015 for the purpose of addressing several of the open issues in connection with the proposed legislation. The meeting did not result in significant progress regarding these issues.

In addition, the Committee held a meeting on January 27, 2016, in conjunction with the Bar Association’s Annual Meeting. At the meeting, Alan Schacter, CPA, and Committee Chair Richard Rosen made a presentation, for full CLE credit, which addressed the topic of the means, methods and protocols to be considered and utilized in the context of the economic valuation of a franchised business. During the presentation, attendees exchanged questions and answers with Mssrs. Schacter and Rosen.  On a personal note, as my term as Chair of the Franchise, Distribution and Licensing Law Committee will soon be coming to an end, I would like to take this opportunity to express how much I have enjoyed participating in the area of franchise law (which has been, for many years, so dear to my heart) with the other members of the Committee and also to welcome Justin Klein, a terrific and well respected franchise attorney, as the new Chair of this Committee. Best of luck, Justin.

– Richard Rosen, Chair

WINTER 2015 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

The Franchise, Distribution and Licensing Law Committee continues to hope that, over time, it will be able to reach a mutual understanding with the New York State Attorney General’s Office with respect to the proposed modifications to the New York State Franchise Sales Act, originally promulgated by our committee and presently scheduled for eventual consideration by the New York State Legislature. After a hiatus of several months, the Committee’s negotiating team of David Oppenheim, Tom Pitegoff and Richard Rosen, together with Kevin Kerwin, legislative liaison, met with representatives of the Attorney General’s office on December 7th, 2015 for the purpose of addressing several of the open issues in connection with the proposed legislation. Discussions are continuing.

In addition, the Committee is scheduled to hold a meeting on January 27, 2016, in conjunction with the Bar Association’s Annual Meeting. At the meeting, a presentation, for full CLE credit, will take place covering the topic of the means, methods and protocols to be considered and utilized in the context of the economic valuation of a franchised business. Attendees will have an opportunity to engage in a question and answer session following the presentation.

For further information regarding the Committee, its activities or the upcoming Committee meeting, please contact Committee Chair Richard Rosen ([email protected] or at 212-644-6644).

– Richard Rosen, Chair

SUMMER 2015 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

On January 28, 2015, the Franchise, Distribution and Licensing Law Committee held a meeting in conjunction with the Annual Meeting of the Business Law Section, which was held at the New York Midtown Hilton Hotel. At the meeting Craig Tractenberg, of Nixon Peabody LLP, presented a fascinating overview of the various aspects of how the fi ling of a Chapter 11 Bankruptcy proceeding may affect, and be affected by, the franchisor/franchisee relationship. Mr. Tractenberg, an experienced practitioner in the bankruptcy field generally and a well-respected expert in bankruptcy in the franchise context, covered a wide range of topics and issues, including how specific provisions in franchise agreements are treated in bankruptcy, its effect on pending litigation, the right to reject agreements (including leases), as well as many other topics. The session, which was well attended, was offered for full CLE credit.

Your Chairman, together with Tom Pitegoff and David Oppenheimer, former Chairs of the Committee, and Kevin Kerwin, an attorney representing the New York State Bar Association, attended two meetings with the New York State Attorney General’s Office to discuss the proposed modifications to the New York Franchise Sales Act that had been previously drafted by a subcommittee of the Franchise, Distribution and Licensing Law Committee. It has been the hope of the Committee that we would reach a consensus with the Attorney General’s Office with the goal of presenting a “united front” to the New York State Legislature in seeking to formulate a bill amending the present statute. The discussions are ongoing.

On May 15th, several members of the Committee participated in a meeting of the Executive Committee of the Business Law Section. A variety of topics, including planning for the Business Law Section fall meeting, the restructuring of the NY Business Law Journal and an update on the status of legislative matters (including the status of the above-discussed modifications to the Franchise Sales Act) were discussed.

For further information regarding the Committee and its activities or with respect to the next Committee meeting, please contact Committee Chair Richard L. Rosen ([email protected] or at 212-644-6644).

– Richard L. Rosen, Chair

WINTER 2014 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

The Business Law Section held its Fall meeting at the beautiful Equinox Golf Resort and Spa in Manchester, Vermont between September 10 and September 12, 2014.  In conjunction with the Fall meeting, the Franchise, Distribution and Licensing Law Committee participated in a CLE program and offered a seminar exploring and explaining various ways for a franchisor to structure its franchise offering and to implement the development of its franchise program. Your Chairman served as moderator for the program, and committee member Thomas Pitegoff, together with Edward (Ned) Levitt, from Toronto, Canada, made presentations regarding the topic.

Despite the relatively compact time frame available for presentation, both the session and the paper which accompanied it were widely encompassing, covering a variety of general domestic franchise issues (e.g., Advertising Fund contributions, transfer issues, term and renewal issues, venue and applicable law). The program also explored multi-unit development deals, both domestically and internationally, and, in that context, examined topics such as territorial exclusivity, the types of entities that area developers would utilize, the types of agreements with respect to these development arrangements, and the particular issues attendant on the expansion of franchise systems internationally.

The session, which was offered for full CLE credit, was well attended and provided the attendees a variety of insights into the various ways to implement and expand a franchise system, both domestically and internationally, at a level usually reserved for those attorneys who are sophisticated practitioners in the field. As such, the attorneys present had an opportunity to hear about and assess the typical (and atypical) means by which franchisors expand their systems, as well as the pitfalls that might attend some of those expansion methods.

During the last several months, our Committee has continued to work on the proposed modifications to the New York State Franchise Sales Act. The proposed modifications, which are presently on the legislature’s calendar for consideration, are intended to be coordinated with the views of the New York State Attorney General’s Office and, by the time this report “goes to press,” a meeting will likely have been held with that Office in order to discuss the Attorney General’s views with respect to the proposed legislation and, in all likelihood, to incorporate those views into the proposed legislation. Our Committee is seeking to make the New York law consistent with the Federal Trade Commission Rule, the federal statute which regulates franchise offerings, and to make the law of our state more “franchise friendly.”

For further information regarding the Committee and its activities or with respect to the next Committee meeting, please contact Committee Chair Richard L. Rosen ([email protected] or at 212-644-6644).

— Richard L. Rosen, Chair

SUMMER 2014 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

Since our last report the Franchise, Distribution and Licensing Law Committee has had two significant occurrences. On January 29th, 2014, the Committee held a meeting in conjunction with the Annual Meeting of the Business Law Section. An (unusually) robust group of 23 franchise attorneys, ranging from those with long time experience in the field to younger folks seeking to learn about this area of law, attended the meeting, which was held at the New York Midtown Hilton. The meeting featured a presentation by Michael H. Seid, founder and Managing Director of MSA Worldwide (together with your Chairman), regarding the means, methods and criteria utilized in evaluating whether a business is suitable for formulating a franchise program. The presentation, which included a variety of forms of agreements and other franchise related documents, was designed to qualify for CLE credit, which was likely a factor in the increased attendance at the meeting. Mr. Seid, one of the foremost franchise consultants in the industry, provided a variety of anecdotal examples and general information, which proved to be of great interest to those in attendance.

On March 13th, your Chairman, together with Tom Pitegoff and David Oppenheim, former Chairs of the Committee, and Kevin Kerwin, Associate Director of Governmental Relations at the New York State Bar Association, met with representatives of the New York State Attorney General’s Office to discuss the status of proposed modifications to the New York Franchise Sales Act that had been previously drafted by a subcommittee of the Franchise, Distribution and Licensing Law Section. The purpose of the meeting was to discuss the proposed modifications to the current statute, with a goal of reaching a consensus with the Attorney General’s Office with the hope, if possible, of presenting a “united front” to the New York State Legislature in seeking to formulate a bill amending the present statute. Our Committee is seeking to make the New York law more “friendly” to the franchise industry, generally, and to make it consistent with the Federal Trade Commission Rule, the federal statute which regulates franchise offerings. The meeting, which was held at 120 Broadway, in Manhattan, was productive and will, hopefully, set the stage for further discussions with the Attorney General’s Office with respect to this proposed legislation, which is now on the Bar Association’s “list of priorities.” For further information regarding the Committee and its activities or with respect to the next Committee meeting, please contact Committee Chair Richard L. Rosen ([email protected] or at 212-644-6644).

— Richard L. Rosen, Chair

winter 2013 NY business law journal
Franchise, distribution and licensing law committee

Since the last report of the Franchise, Distribution and Licensing Law Committee, the Committee’s activities have primarily been focused on tracking and analyzing the progress with respect to our proposed modifications to the New York Franchise Sales Act and the accompanying regulations thereto. The Committee is coordinating with the Legislative Affairs Committee of the Business Law Section in planning a strategy to effectuate the arduous task of shepherding the proposed changes to the Franchise Sales Act through the State legislative process. As we have previously noted to members of the NYSBA, certain inconsistencies exist between the present New York statute and the amended Federal Franchise Rule, and the legislative changes proposed by the Committee are designed to make the New York statute more consistent with the Federal Rule and, in addition, to make New York State a more attractive venue for franchisors who, in the past, have shied away from setting up their franchise “base” within our State.

Several members of the Committee attended the Fall meeting of the Business Law Section, including a meeting of the Section’s Executive Committee, held October 3-5 in Lenox, Massachusetts. At this meeting, amongst other things, the proposed changes to the New York State Franchise Sales Act were discussed, and the Legislative Affairs Committee indicated that our proposed legislation was high on its “list of priorities” to pursue. Finally, the Committee plans on holding its next meeting in conjunction with the Annual Meeting of the New York State Bar Association, scheduled to be held on January 28, 2014 in New York City. For further information regarding the Committee and its activities or with respect to the next Committee meeting, please contact Committee Chair Richard L. Rosen ([email protected] or at 212-644-6644).

— Richard L. Rosen, Chair

summer 2013 NY BUSINESS LAW JOURNAL
FRANCHISE, DISTRIBUTION AND LICENSING LAW COMMITTEE

The Franchise, Distribution and Licensing Law Committee has been very active this year. The Committee continues to pursue changes to the New York Franchise Sales Act and its accompanying Regulations in order to make the Act more business friendly and consistent with the Federal Franchise Rule, which was amended in 2008. The most recent Committee meeting was held on January 23, 2013. The meeting included a presentation by Aaron Chaitovsky, CPA, CFE and a Partner with the New York-based accounting firm, Citrin Cooperman. Mr. Chaitovsky’s presentation included a discussion regarding counsel’s obligation to review and understand the financial statements included in a franchisor’s Franchise Disclosure Document. The session also included a review of the basis components of financial statements prepared in accordance with GAAP, a detailed examination of franchisor cash flow statements and an identification of the critical items typically included in a franchisor’s financial statements which can reveal the financial viability of a franchisor. The next Committee meeting will take place in June 2013. Please contact committee Chair David W. Oppenheim ([email protected]) for more information.

— David W. Oppenheim, Chair

Winter 2012 NY Business Law Journal
Franchise, Distribution and Licensing Law Committee

The Franchise, Distribution and Licensing Law Committee has been very active this year. The Committee continues to pursue changes to the New York Franchise Sales Act and its accompanying Regulations in order to make the Act more business friendly and consistent with the Federal Franchise Rule, which was amended in 2008. Recently, the Committee invited Joseph Punturo, the Franchise Section Chief for the New York Department of Law, to attend and present at its Committee meeting. Mr. Punturo discussed the recently promulgated Trade Show Exemption under Section 684(1) of the New York Franchise Act; procedures for applying for exemptions under the New York Franchise Act, including discretionary exemptions; and the Committee’s proposed amendments to the New York Franchise Act and its accompanying Regulations in order to make the Act more business friendly and consistent with the FTC Franchise Rule. The Committee’s most recent meeting included a lively presentation led by Stan Friedman, a Certified Franchise Expert and a principal with an Atlanta-based franchise consulting fi rm. Mr. Friedman discussed the role that outside counsel can and should play in helping its start-up and emerging franchisor clients achieve sustainable growth. Mr. Friedman shared real world experiences about the challenges that emerging franchisors encounter when taking the leap from “start-up” to “stay-up.” The Committee’s next meeting is scheduled for January 23, 2013 in conjunction with the NYSBA’s Annual Meeting.

– David W. Oppenheim, Chair

Summer 2012 NY Business Law Journal
Franchise, Distribution and Licensing Law Committee

The committee has been very active. At its most recent meeting, in January 2012, the committee heard from Mr. Joseph Punturo, the Franchise Section Chief for the New York Department of Law, on the recently promulgated Trade Show Exemption under Section 684(1) of the New York Franchise Act and procedures for applying for exemptions under the New York Franchise Act, including discretionary exemptions, and discussed the committee’s proposed amendments to the New York Franchise Act and its accompanying regulations to make the Act more business friendly and consistent with the Federal Franchise Rule, which was amended in 2008.

Committee Chair David W. Oppenheim and member Andre R. Jaglom took part in a panel discussion in Buffalo, New York at the Ontario-New York Legal Summit, a joint two-day CLE program sponsored by the New York State Bar Association and the Ontario Bar Association. The session focused on structuring franchise systems and alternative distribution models in the United States and Canada.

— David W. Oppenheim, Chair

Winter 2011 NY Business Law Journal
Franchise, Distribution and Licensing Law Committee

The Franchise Distribution and Licensing Law Committee holds meetings for its members and most recently presented an educational session at the Business Law Section’s Fall Meeting in Cooperstown. The committee continues to advance its proposal to amend New York’s franchise statutes that now cause almost universal confusion among those affected by their terms (including the surprises inherent in even determining if those terms apply to them). The amendments will clarify which persons, entities, and activities fall within their scope, to conform those statutes’ terms and provisions with Federal Trade Commission rules, uniform franchise offering requirements, and current usages of trade.

—David W. Oppenheim, Chair

Summer 2011 NY Business Law Journal
Franchise, Distribution and Licensing Law Committee

The Franchise, Distribution and Licensing Law Committee has been very active. It continues to pursue changes to the New York Franchise Sales Act and its accompanying Regulations in order to make the Act more business friendly and consistent with the Federal Franchise Rule which was amended in 2008. The last Committee meeting was held in January and featured a presentation by Christine Harris and Edith Wiseman of Frandata. Ms. Harris spoke to the Committee members about the 2011 changes to the SBA Franchise Registry Guidelines and Procedures and Ms. Wiseman discussed Frandata’s October 2010 Economic Forecast for Franchising in 2011 and beyond. Approximately 20 Committee members attended the meeting. The Committee is planning an “Introduction to Franchising” CLE Program for the Fall.

—David W. Oppenheim, Chair

Links of Interest

Governmental Agencies

State Agencies

• New York State Attorney General’s Office
• Wisconsin Division of Securities
• Listing of Other State Agencies Administering Franchise Disclosure Laws

Federal Agencies

• Federal Trade Commission Guide to the FTC Rule
• Small Business Administration

Not For Profit Sites

National & International Organizations

• American Association of Franchisees & Dealers
• American Franchisee Association
• International Franchise Association
• International Franchise Association – Ombudsman Program
• International Franchise Association – Online Courses
• National Franchise Council
• National Franchise Mediation Project
• North American Securities Administrators Association
• International Franchise Research Centre, University of Westminster, London, England
• The Western Franchise Assn.
• World Franchise Council

Other Bar Association Sites

• American Bar Association Forum on Franchising
• California Bar Association Franchise Law Committee of the Business Section

Commercial Sites

• Be The Boss
• Centercourt
• EntreMkt
• Entrepreneur Magazine
• Franchise Annual Online
• Franchise Equity Group
• Franchise Handbook Online
• Franchise Net Australia
• Franchise Update
• Franchise Times
• Frannet
• World Franchising

Other Links

• Bison Franchise Network
• Franchise Showcase
• Franchise Info Mall
• Franchising.com
• Franchise America
• Franchise Forum (in German)