Franchising in the Republic of Kazakhstan

Introduction

The franchise market in Kazakhstan started to develop in the mid-1990s. The Kazakhstan Franchising Agency (KFA) estimates that the number of foreign brands currently franchising in Kazakhstan is close to 500 (and will grow to 550 by 2020), with an estimated 3,000 franchised outlets employing over 30,000 people and estimated annual sales of US $2.5 billion.  According to the KFA, there are about 30 domestic (local) franchises with over 200 franchised outlets. Continue Reading

Franchising in New Zealand

Introduction

New Zealand is an exciting and fast developing market for franchising. The population of New Zealand is about 4.6 million and there are over 630 franchise systems—one for every 7,400 people—which is very high in comparison with other countries. Why? As a whole, New Zealanders love brands and businesses that succeed, and franchising offers people a chance to leave the security of employment and purchase a franchised business which should succeed provided the system is followed.

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Franchising in Myanmar

Introduction

The relaxation of foreign investment restrictions and a growing, aspiring middle class have encouraged new players to enter Myanmar’s franchising industry in recent years. Previously, franchises in Myanmar predominantly operated in the food and beverage industry; however, in the last few years, the country has witnessed a growth spurt of franchise operations in the services and education sectors. While no official statistics are available on overseas franchises in the country, brands currently present in Myanmar include, among others, Best Western, Europcar, Gloria Jean’s Coffees, Gymboree, KFC, Krispy Kreme, Pingu’s English, and Swensen’s.

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Franchising in Spain

Introduction

The Kingdom of Spain is a democratic parliamentary monarchy, a member of the European Union and a signatory to the Schengen Area Agreement. Spain is also part of most international organizations and a signatory to most international treaties and conventions.

Spanish territory is administratively divided in 17 autonomous communities (regions) including two autonomous cities in Northern Africa (the cities of Ceuta and Melilla). According to the 1978 Spanish Constitution and the respective Autonomic Statutes, all of these territories have some legislative, administrative and political exclusive or shared authority. Spanish law is based on civil law with civil and commercial codes.

From a commercial point of view, franchising is ruled in Spain by regulations in the Retail Act (Ley de Ordenación del Comercio Minorista), as amended in December 2018, as well as by a special Decree on Franchise (the Regulation). These norms deal with administrative and general rules, but do not regulate the franchise relationship. Continue Reading

Webinar Replay for Franchisors: NLRB Developments

Quarles & Brady’s Labor & Employment Practice recently presented a webinar on, “Developments at the National Labor Relations Board and Their Impact on Employers and Franchisors.” 

Judi Williams-Killackey, Chris Nickels and Steve Kruzel reviewed the recent General Counsel memo and recent decisions from the NLRB, including those relating to its joint employer standard, workplace policies and employee handbook rules, micro-unit bargaining rules, and an employer’s ability to implement unilateral changes.

Unable to attend? Click here for the video.

Proposed Florida Franchise Bill Dies in Committee

Vector illustration of a white Florida map with shadow in a green circle

SB 750, the deceptively titled “Protect Florida Small Business Act,” appears to have met its demise.  Although it passed the Senate Committee on Regulated Industries by a vote of 7–2, the bill will be not be scheduled for a hearing by the Senate Judiciary Committee. This marks the end of SB 750’s journey in the 2017 Florida legislative session. SB 750 drew sharp criticism from franchisors and franchisees alike for its expansive and invasive regulation of the franchisor-franchisee relationship. If passed, the bill would have severely curtailed a franchisor’s ability to protect its brand and goodwill and undermined the viability of franchising in Florida.

Proposed Bill Threatens Franchising in Florida

Business People with Contract-700_440A bill introduced this month in the Florida Legislature threatens to fundamentally shift the balance of franchise relationships in the Sunshine State. SB 750, deceptively titled “Protect Florida Small Business Act,” represents the most expansive, invasive and burdensome franchise relationship law ever proposed in the United States, if not the world. Although it contains numerous provisions harmful to franchisors, franchisees and the public alike, the Act overwhelmingly subverts a franchisor’s ability to protect its brand and goodwill. Continue Reading

Should Franchisors be Concerned with the McDonald’s Wage Deal?

Business People with Contract-700_440McDonald’s Corp. recently agreed to pay $3.75 million to settle a lawsuit filed by workers of one of its franchisees. Stop the presses! Isn’t that the opposite of what McDonald’s should be doing?  Isn’t McDonald’s a leading player in fighting the idea that it is a joint employer of franchisee’s workers? Let’s back up a moment.

In 2014, employees of a California McDonald’s franchise sued both the franchisee and McDonald’s Corp. for labor violations alleging that, as joint employers, the franchisee and McDonald’s had failed to pay overtime, keep accurate pay records and reimburse workers for time spent cleaning uniforms. In late 2015, the franchisee settled with the workers for $700,000, leaving McDonald’s Corp. as the lone defendant in the case. During the case, the court had ruled that McDonald’s was not a joint employer, but that McDonald’s could be liable under the doctrine of ostensible (or apparent) agency, under which the workers must prove that they reasonably believed McDonald’s was their employer because, for example, they wore McDonald’s uniforms, served McDonald’s food in McDonald’s packaging, and received paystubs and orientation materials marked with McDonald’s name and logo. Few franchisee employees have prevailed on similar apparent agency claims. Continue Reading

Good News for Franchisors: Franchisors Not Joint Employers in Wisconsin

Illustration depicting an illuminated neon sign with a Franchise concept.

On March 2, 2016, Wisconsin Senate Bill 422 was signed into law. This bill clarifies that a franchisor is not the employer of a franchisee’s employees under several areas of Wisconsin law:  unemployment insurance, worker’s compensation, Wisconsin’s wage and hour laws and Wisconsin’s fair employment laws. Employer liability will attach to a franchisor as it relates to franchisee’s employees only where:

  • The franchisor has agreed in writing to assume that role; or
  • The franchisor has “exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purposes of protecting the franchisor’s trademarks and brand.”

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Franchisors: Take Note of New Joint Employment Guidance

Franchise_Blog_IconThe Department of Labor (“DOL”) has weighed in on the joint employer issue, releasing an Administrator’s Interpretation (“AI”) setting forth the DOL’s position as it relates to joint employment under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act.

The joint employment concept under the FLSA is not new and the AI does not explicitly target franchising relationships, but it is important for franchisors to continue to review their relationships with franchisee’s employees in light of this latest foray (see our previous blog posts).

The DOL asserts that the AI is intended for a wide range of industries and is not focused on franchise relationships, stating:

The form of business organization, such as franchise, does not necessarily indicate whether joint employment is present. Indeed, the existence of a franchise relationship in and of itself, does not create joint employment.

Joint employment exposes a company to expansive liability. With wage and hour class actions on the rise, it would not be surprising if plaintiffs’ lawyers rely on this AI to name both the franchisee and franchisor as defendants in these types of lawsuits.

This new guidance is consistent with the aggressive joint employer positions taken by the NLRB and other branches of the DOL including OSHA. Ultimately, a determination of joint employment will be made on the specific factual situation. The DOL’s goal is to push the boundaries of joint employment and to hold companies that benefit from work performed by another entity’s employees equally responsible for employment and labor law violations.

While the overall goal of protecting abused employees and ensuring labor laws are not circumvented by indirect employment arrangements may certainly be laudable, the standards and analysis utilized are more likely to ensnare innocent businesses.

For a more detailed analysis, please see our client alert.

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