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News Briefs
Rhode Island Proposes Changes to Franchise Rules
Rhode Island securities regulators are proposing changes to the state's rules defining fractional franchises and the expiration of franchise registrations and exemptions.
To be eligible for the fractional franchise exemption from registration, a franchisee must meet the following five criteria:
- Two or more years of experience in an established business of which the franchisee will become a component;
- Operation from the same business location as the franchisee's established existing business;
- Offering products or services that are substantially similar to the existing products or services offered by the franchise;
- A volume of the business generated by the franchised business that will not exceed 20% of the total revenues of the franchisee's primary business operation; and
- The franchisee cannot be controlled by the franchisor.
According to George Wesolowski, senior securities examiner, Rhode Island Department of Business Regulation (“DBR”), Securities Division, the idea is to harmonize the exemption with other states by following the Model Rule developed by the North American Securities Administrators Association (“NASAA”). However, NASAA's model rule is still in proposed form, said Dale Cantone, head of NASAA's franchise task force. Cantone described Rhode Island's proposed rule as close to California's current fractional franchise exemption.
For registration renewals, DBR issued a notice that it will amend Section 19-28.1-9(d) of the Franchise Investment Act so “that all registrations and exemptions expire one year after issuance and renew on an annual cycle.” This would replace the current system under which a franchise's registration expires 120 days after the end of a franchisor's fiscal year following the application date. Because renewals must be applied for within 30 days of expiration, and most franchises have a fiscal year that ends on Dec. 31, the result of the current system is a gridlock of renewals in April every year.
With the revision, every franchise will get a full year of registration, regardless of when its registration is obtained, said Wesolowski. Over time, this will likely spread out the flow of registrations across the year, as new registrants can renew their registrations at the time of year they received their original approvals.
Comments on either proposed rule are due by Nov. 8, on which date a public hearing will be held in Cranston, RI. The proposals and contact information can be found at the “Regulations” link on Rhode Island DBR's website, www.dbr.ri.gov.
A&W Franchisees Purchase Brand from Yum! Brands
Franchisees are purchasing the A&W Restaurant brand from Yum! Brands in a transaction that is expected to close by the end of the year. The National A&W Franchisees Association and an A&W large franchisee, A Great American Brand LLC, will be making the acquisition. Attorneys from Frost Brown Todd LLC advised the purchasers in the transaction.
“We intend to be a franchisee-collaborative operation in a big way, said Dale Mulder, chairman of the National A&W Franchisees Association and A Great American Brand. Mulder has been an A&W franchisee for 48 years, and he and his children own 11 A&W restaurants in Michigan. A&W has about 300 restaurants, almost exclusively in the United States.
“We're in this for the long haul. Our motivation is to build steadily, one-by-one, in cooperation with our franchises in the U.S. and to work with our partners in other countries,” said Mulder, who was CEO of A&W Inc. for seven years, ending in 1991. “A&W has been purchased and sold several times in the last 20 years, and that is not our intent.”
Yum! Brands also announced that it reached an agreement to sell Long John Silver's, which has about 1,000 restaurants, to several large franchisees and outside investors. The leaders of that consortium, LJS Partners LLC, could not be reached by press time.
When the sales are completed, Yum! still will retain the KFC, Pizza Hut, and Taco Bell brands. “As we continue to sharpen our long-term growth focus on international expansion and improving our U.S. brand positions in KFC, Pizza Hut, and Taco Bell, Long John Silver's and A&W no longer fit our long-term growth strategy,” said Yum! CEO David Novak in a press release.
Sun Capital Partners' Franchises File for Bankruptcy
Several of the major brands owned by Sun Capital Partners have filed for bankruptcy protection in the last few weeks. Sun Capital Partners is a private investment firm that owns more than 80 companies in numerous industries, including having a large presence in franchised restaurants.
Real Mex Restaurants, which was purchased by Sun Capital Partners in 2006, filed for Chapter 11 bankruptcy protection in California on Oct. 4. Its largest creditor, by far, is Wilmington Trust, which has outstanding an unsecured loan of nearly $34.6 million. Real Mex owns the Acapulco, Chevys, and El Torito brands.
A few days later, another Sun Capital Partners property, franchise restaurant chain Friendly's, filed for Chapter 11 bankruptcy protection. Friendly's has struggled for a while, and it announced it would close 63 restaurants as part of a proposed restructuring related to the bankruptcy filing. About 420 Friendly's are still open.
According to news reports, Friendly's owes more than $250 million to creditors, including to Sun Capital Partners, which bought the brand in 2007 for slightly less than $131 million. Friendly's is seeking a loan of $70 million to stay in operation.
Rhode Island Proposes Changes to Franchise Rules
Rhode Island securities regulators are proposing changes to the state's rules defining fractional franchises and the expiration of franchise registrations and exemptions.
To be eligible for the fractional franchise exemption from registration, a franchisee must meet the following five criteria:
- Two or more years of experience in an established business of which the franchisee will become a component;
- Operation from the same business location as the franchisee's established existing business;
- Offering products or services that are substantially similar to the existing products or services offered by the franchise;
- A volume of the business generated by the franchised business that will not exceed 20% of the total revenues of the franchisee's primary business operation; and
- The franchisee cannot be controlled by the franchisor.
According to George Wesolowski, senior securities examiner, Rhode Island Department of Business Regulation (“DBR”), Securities Division, the idea is to harmonize the exemption with other states by following the Model Rule developed by the North American Securities Administrators Association (“NASAA”). However, NASAA's model rule is still in proposed form, said Dale Cantone, head of NASAA's franchise task force. Cantone described Rhode Island's proposed rule as close to California's current fractional franchise exemption.
For registration renewals, DBR issued a notice that it will amend Section 19-28.1-9(d) of the Franchise Investment Act so “that all registrations and exemptions expire one year after issuance and renew on an annual cycle.” This would replace the current system under which a franchise's registration expires 120 days after the end of a franchisor's fiscal year following the application date. Because renewals must be applied for within 30 days of expiration, and most franchises have a fiscal year that ends on Dec. 31, the result of the current system is a gridlock of renewals in April every year.
With the revision, every franchise will get a full year of registration, regardless of when its registration is obtained, said Wesolowski. Over time, this will likely spread out the flow of registrations across the year, as new registrants can renew their registrations at the time of year they received their original approvals.
Comments on either proposed rule are due by Nov. 8, on which date a public hearing will be held in Cranston, RI. The proposals and contact information can be found at the “Regulations” link on Rhode Island DBR's website, www.dbr.ri.gov.
A&W Franchisees Purchase Brand from Yum! Brands
Franchisees are purchasing the A&W Restaurant brand from Yum! Brands in a transaction that is expected to close by the end of the year. The National A&W Franchisees Association and an A&W large franchisee, A Great American Brand LLC, will be making the acquisition. Attorneys from
“We intend to be a franchisee-collaborative operation in a big way, said Dale Mulder, chairman of the National A&W Franchisees Association and A Great American Brand. Mulder has been an A&W franchisee for 48 years, and he and his children own 11 A&W restaurants in Michigan. A&W has about 300 restaurants, almost exclusively in the United States.
“We're in this for the long haul. Our motivation is to build steadily, one-by-one, in cooperation with our franchises in the U.S. and to work with our partners in other countries,” said Mulder, who was CEO of A&W Inc. for seven years, ending in 1991. “A&W has been purchased and sold several times in the last 20 years, and that is not our intent.”
Yum! Brands also announced that it reached an agreement to sell Long John Silver's, which has about 1,000 restaurants, to several large franchisees and outside investors. The leaders of that consortium, LJS Partners LLC, could not be reached by press time.
When the sales are completed, Yum! still will retain the KFC, Pizza Hut, and
Sun Capital Partners' Franchises File for Bankruptcy
Several of the major brands owned by Sun Capital Partners have filed for bankruptcy protection in the last few weeks. Sun Capital Partners is a private investment firm that owns more than 80 companies in numerous industries, including having a large presence in franchised restaurants.
Real Mex Restaurants, which was purchased by Sun Capital Partners in 2006, filed for Chapter 11 bankruptcy protection in California on Oct. 4. Its largest creditor, by far, is
A few days later, another Sun Capital Partners property, franchise restaurant chain Friendly's, filed for Chapter 11 bankruptcy protection. Friendly's has struggled for a while, and it announced it would close 63 restaurants as part of a proposed restructuring related to the bankruptcy filing. About 420 Friendly's are still open.
According to news reports, Friendly's owes more than $250 million to creditors, including to Sun Capital Partners, which bought the brand in 2007 for slightly less than $131 million. Friendly's is seeking a loan of $70 million to stay in operation.
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.
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.
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.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?