This article begins a feature that periodically will examine a specific section or clause in the Uniform Franchise Offering Circular (UFOC). In a UFOC, a typical third-party beneficiary clause reads like this: "No third-party beneficiaries. Nothing in this Agreement is intended, nor will be deemed, to confer rights or remedies upon any person or legal entity not a party to this Agreement."
Highlights of the latest equipment leasing news from around the country.
Best practices" seem to be on the tips of everyone's tongues these days. At the recent ELA Executive Roundtable Conference, the concept of applying best practices to leasing companies was a key focus of discussion. This trend is a clear endorsement of continually benchmarking performance and learning from others what works and what doesn't.
When equipment lessors evaluate the risks of underwriting lease transactions for manufacturing equipment, one of the primary considerations in the credit decision is the resale value of the equipment in the event of default. In preparing for this risk, a key component of an underwriter's evaluation must be how to access and market the equipment in the event of a default. Therefore, it is critical to look at every transaction from the perspective of how much money a piece of equipment will bring in a sale, if there is an established market for the particular equipment, and also, how and where the equipment can best be marketed and sold if a liquidation is necessary. An often-overlooked and significant factor in this analysis is whether the lessor will have unfettered access to remove the equipment to sell, refurbish, and/or prepare for liquidation at the location where it has been used.
The first part of this article, published in last month's issue, addressed the importance of the distinction between true leases and loans and began a detailed analysis of the rules that courts use for state law and bankruptcy purposes to determine the category in which a given transaction belongs.
As outlined in part one of this article, courts utilize the Two-Part Test provided in §1-201(37) of the Uniform Commercial Code, and any transaction that satisfies that Two-Part Test creates a security interest as a matter of law. The first prong of the test is satisfied if the lessee does not have the option of terminating the lease early or if any such early termination option requires the lessee to pay the lessor a significant sum. The second prong, which addresses the issues that are most often litigated, is discussed below.
As franchisors find new ways to reach out to prospective franchisees, there are inevitably questions about how franchise laws ' written long before electronic media such as the Internet and e-mail were contemplated ' might apply. Recently, the Federal Trade Commission's (FTC) staff provided some guidance to help franchisors understand how the FTC Franchise Rule applies with respect to earnings claims made in the context of Internet advertising.
Last month's International Franchise Association (IFA) Legal Symposium brought together many of the world's leading franchise attorneys and in-house counsel for large franchisors. The items below are brief accounts of some of the presentations and discussions.
Highlights of the latest franchising news from around the country.
Highlights of the latest franchising cases from around the country.
Rights of first offer and first refusal are frequently sought by tenants, especially for space contiguous to the original leased premises, in order to give tenants a combination of flexibility and leverage when dealing with their potential expansion requirements. Landlords are understandably reluctant to grant such rights, as they may interfere with the landlord's ability to accommodate the future needs of existing or prospective tenants.
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