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Exemptions and Prohibitions in the New Franchise Rule
The New Franchise Rule deletes the four exclusions in the existing Rule for employer-employees and general partnerships, cooperative organizations, testing or certification services, and single trademark licenses, since a revised definition of 'franchise' in the Rule obviates the need for these exclusions. The New Rule retains the exemption for franchise sales under $500, fractional franchises, and leased departments, while adding an exemption for petroleum marketers governed by the Petroleum Marketing Practices Act, as well as for three categories of 'sophisticated investor.'
The 'sophisticated investor' exemptions eliminate disclosure obligations to persons who can, it is assumed, take care of themselves without government assistance. The first exemption applies to a franchise where a large investment is required. Exempt are transactions in which the prospective franchisee makes an initial investment of at least $1 million, excluding the cost of unimproved land and funds provided by the franchisor or its affiliates. The total initial investment in a multi-unit franchise is used in determining the required amount. The franchisee must sign
an acknowledgment certifying the investment will exceed $1 million and that the franchisee is aware of the Rule and knows that making an investment in that amount and signing the acknowledgment exempts the transaction from the Rule. If a franchisee-entity has more than one investor, the exemption will apply only if at least one individual invests more than $1 million in the project. A group of investors contributing less than $1 million each does not satisfy the exemption's requirements. If a conversion franchise is involved, the initial investment in the unit or units being converted can satisfy the $1 million threshold. For a franchise transfer, the amount of the sale is used to determine the investment for purposes of the exemption.
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.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
'Insurable Interest' and the Scope of First-Party Coverage
This article reviews the fundamental underpinnings of the concept of insurable interest, and certain recent cases that have grappled with the scope of insurable interest and have articulated a more meaningful application of the concept to claims under first-party property policies.