LJN Newsletters

Our readers, from time to time, contact me to suggest that we run an article on one topic or another (and I always welcome such requests). A number of…

It is not uncommon for a holding company (or private equity fund) to have at least one operating subsidiary (or portfolio company) that is underperforming relative to the other companies it owns. Sometimes problems can be fixed and fortunes reversed. Other times, however, the subsidiary/portfolio company continues to struggle and may eventually become truly distressed and even insolvent. At some point, the strategic decision will be made to discontinue the operating subsidiary's business. When this occurs, strategy must be quickly developed and executed to minimize any ongoing losses and to maximize the recovery for the subsidiary's stakeholders.
Any business strategy should be approached with an informed understanding of the overall legal landscape, as well as the specific risks and potential rewards associated with each of the parent's available options. Likewise, the parent must understand its position in the decision-making process relative to those of the insolvent subsidiary's other obligees ' its creditors.

Highlights of the latest franchising news from around the country.

Highlights of the latest franchising cases from around the country.

On Aug. 25, the Federal Trade Commission released a proposed final rule, "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures," known more commonly as the Franchise Rule. FBLA's editorial staff is now working on an in-depth analysis of the Franchise Rule in a special report that will be distributed to all subscribers. Check our Web site at www. ljnonline.com/alm?franchising for the most up-to-date coverage. To read the proposed Franchise Rule, go to the FTC's Web site at www.ftc.gov/opa/2004/08/franchiserule.htm.

On July 13, 2004, Domino's Pizza completed an initial public offering (IPO) and was transformed from a privately held franchisor of nearly 2000 restaurants worldwide (1300 in the United States) to a publicly traded company listed on the New York Stock Exchange. In this interview, Elisa D. Garcia C., Domino's Pizza executive vice president and general counsel, gives a quick overview of how Domino's worked with its franchisees to make the IPO a success.

The high cost of discovery, especially e-discovery, has caused franchisors to frequently look to alternative dispute resolution. However, this is not always possible. Even when it is, it is not always wise to lose the benefits of an actual trial. Confidence that you can efficiently handle electronic discovery leaves all options open and also makes a positive result more likely.

Sixty franchisees forced The Ground Round restaurant chain to file bankruptcy on Feb. 19, 2004. The same franchisees, 4 months later, became their own franchisor. They bought the franchise assets out of bankruptcy, including all the franchise agreements, the development agreements, 42 trademarks, and 38 prime leases which they assigned to the subtenants. The franchisees formed a for-profit cooperative, reduced their own franchise royalties, and obtained traditional bank financing. They achieved their goal by maintaining a united front, developing a unique governance structure, and maintaining a vision for operating profitably unlike anyone else in the casual-dining restaurant sector.