Significant Considerations for Effective Franchise

Transcription

Significant
Considerations for
Effective
Franchise Systems
Kansas City, Missouri
September 16, 2015
Latest Developments on Franchisor “Employer” Status:
What Franchisors and Franchisees Should Know
Michaelle Baumert
NLRB Changes to the “Joint Employer”
Standard
Browning-Ferris Decision
Freshii/Nutritionality Advice Memo
McDonald’s cases
© 2015 Husch Blackwell LLP. All Rights Reserved.
1
Browning-Ferris – A Closer Look
Factual Basis – Staffing
Agency/Teamsters’ Election
What the Decision Means for
Browning-Ferris
The Impact of the Decision on
Franchising
Change in the Joint Employer Standard
Pre-BF Joint Employer
Standard
Post-BF Joint Employer
Standard
 Businesses are joint employers
only when they share “direct
and immediate” control over
matters governing the
essential terms and conditions
of employment (hiring, firing,
discipline, supervision,
direction).

Two-part test that looks at direct,
indirect, and potential control
reserved by contract (even where
never exercised). Fact-specific
analysis that has to be decided
case-by-case. Standard is
potentially unlimited in scope.
Dissent says this fundamentally
alters business relationships,
including franchising.
2
Immediate
Potential Impact
on Franchise
Labor Relations
Neutrality
Agreements
Joint Employer
Petitions to Test
Concept
Joint Bargaining with
Franchisee and
Franchisor?
Secondary
Boycott
Potential
Other NLRB Activity
3
David Weil,
DOL Wage
and Hour
Division
Administrator
“Fissured
Employment
Relationships”
Impact on
Other
Franchising
Agencies?
Controlling the Risk
 Eliminate appearance of control
 Review agreement language
 Training for operations personnel with contact with
franchisees
 Review insurance coverage
 Union prevention strategies and training
4
Questions?
5
Lessons Learned in 20 years of Franchising
Jeff Huber, President & CEO, Home Instead, Inc.
Franchise Owner Relations
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Active Listening
Focus on WHY
Establish FEC before you need it and on your own terms
Transparency and clarity
Control expectations
Deal in facts
Communicate, communicate, communicate
1
The Importance of Planning
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Needs to be a discipline
Inclusive and exclusive
Get it down to one page
Set really big compelling goals
“Law of Unintended Consequences”
Focus on the front line, not the top line
 Assets, not cost centers
 “The Happy Continuum”
 Invest in people – especially the Home Office
2
Cohesive senior leadership team
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“The Five Dysfunctions of a Team”
“Robust dialogue”
Disagree and commit
Being in the “foxhole”
Retreats
Culture is everything
 Organic at first
 “Living Home Instead”
 Moving to the right
3
Change IS your job
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Intellectually easy, emotionally hard
From “here” to “there”
20-60-20 rule
Starts with the leader
Invest in Government Affairs
 Husch Blackwell
 IFA
 Industry association
4
Some random lessons
 International sounds great but is really hard
 Be really selective in awarding franchises
 Focus as much on owners’ bottom line as their top line
Final Thoughts
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This stuff is hard
Always competing interests
Be guided by principles
Keep it fun
Grow yourself
5
My Influences
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Jim Collins
Patrick Lencioni
Bill Hybels
St. Ignatius
Questions?
6
9/14/2015
Get Results:
Effective Franchise Communication
Jami Hahn
president
©Forward Communication Strategies, Inc.
1
9/14/2015
Myth of Effective Communication
It’s done.
2
9/14/2015
Feedback
Loop
strategy
ACTION
Effective Franchise
Communication
3
9/14/2015
There is no
END
GAME
without a
CLEAR
PLAN
A Clear Plan
Right strategy
+
Right tactics
>
Good process
4
9/14/2015
Evaluate
When
How
Who
What
Why
4 PRINCIPLES
For Effective Franchise Communication
5
9/14/2015
Demonstration
Emotion & Sincerity
Gaining interest
Detail
Reference
Clarity & Direction
Talking Heads
great band;
lousy video
6
9/14/2015
3 Rules for Good Video
Make it stick!
Have a point that
Demonstrate;
is clear and easily
don’t tell.
articulated
(Simple, profound,
unexpected)
Communicating Personality
is NOT a
cardinal sin
7
9/14/2015
3 Rules for Message Engagement
Bring company to life
in your messages
Build your
communications
Connect with your
around your style
audiences’ hearts
and minds
It takes a Village
to communicate
effectively
8
9/14/2015
3 Rules for Involving Others
Expert knowledge
doesn’t make expert
Provide resources
to be resourceful
communicators
Authenticity is key!
Take your topics seriously
not yourself
9
9/14/2015
3 Rules in Getting Results
Define communication
Measure what
Clearly articulate
matters to the
done through
objective owner
business objectives
success by your
objective’s success
10
9/14/2015
Right tactics
Good process
Right strategy
Questions
11
9/14/2015
Thank you!
Get Results: Effective Franchise Communication
Jami Hahn
president
12
Franchisor Considerations When
The Franchise Relationship Ends
Mike Norton
AGENDA
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Transition Planning
Nuts and Bolts of Transition
Covenant Enforcement
Internet and Social Media Considerations
1
TRANSITION PLANNING
TRANSITION PLANNING
 Preparation Starts at the Beginning of the Relationship
and Continues Through the Life of the Relationship
̶ Ensure agreements, covenants, guarantees, leases and
other documentation formalizing rights and obligations of
the relationship are formalized and complete
̶ Conduct periodic reviews of key franchisee documents
including financial statements, leases, corporate
organization documents, etc.
̶ Consistently enforce franchise agreement regarding
documentation provisions in franchise agreements
2
TRANSITION PLANNING
 Understand the Source and Scope of Transition
Rights/Obligations
̶ Contract rights and obligations
̶ Regulatory rights and obligations
 Develop Goals for Transition
̶ What will happen with the physical location?
̶ What will happen with the former franchisees?
̶ What will happen with the intangible property?
 Understand Notice/Decision Requirements and Timeline
TRANSITION PLANNING
TERMINATE THE FRANCHISE AGREEMENT?
Recent case law is mixed on how termination affects the
franchisor’s right to recover lost future royalties.
3
TRANSITION PLANNING
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LOST FUTURE ROYALTIES AS A REMEDY
Sealy and courts following it’s analysis are skeptical in
awarding lost future royalties for termination involving nonpayment of fees
Lost future royalty claims are much stronger in cases where
franchisee has abandoned location
Courts will often award only “net profits” so franchisor must be
able to show the relationship between franchisor operating
expenses and the royalties from the particular franchisee
Mitigation of damages should also be considered and proven
NUTS AND BOLTS OF TRANSITION
4
 Physical De-identification
̶
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Signage
Trade Dress
Inventory, Equipment, and Supplies
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 Protection of Proprietary Materials
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Operations Manuals
Recipes, Systems, Forms
 Tangibles and Intangibles for Continued Operation
̶
Customer Lists
Phone Numbers
̶
 Real Property Rights
̶ Lease assignments
̶ Leasehold improvements
 Establishing Value of Repurchased Assets
̶ Contract requirements
̶ Statutory requirements
̶ Establishing fair market or book value
5
COVENANT ENFORCEMENT
 Defining the Scope of an Enforceable Noncompete
̶
Must be able to articulate a legitimate/protectable interest
Length of Covenant
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How long can it last?
When do you start to count?
Geography of an Enforceable Noncompete
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How many miles is too many miles?
Miles from where?
Scope of Protection
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What activities are prohibited?
What is a competitive business?
6
Enforcement Against Nonsignatories
 Courts are looking for cooperative conduct between
signatories and nonsignatories
 Nonsignatories benefiting from the franchise agreement
and its terms
 Former close relationship with the franchise that confers
a continuing benefit to nonsignatories
 Franchisors have had recent success in these types of
cases
 Golden Krust Patties, Inc. v. Bullock – Covenant enforced
against franchisee’s son
 H&R Block Tax Services, LLC v. Strauss – Covenant
enforced against former franchisee employees
 Tantopia Franchising Co., LLC v. West Coast Tans of PA,
LLC – Covenant enforced against “straw-man” owner
 Winmark Corp. v. Brenoby Sports, Inc. – Covenant not
enforced against new owner who purchased in an arm’s
length transaction
7
INTERNET AND SOCIAL MEDIA
CONSIDERATIONS
INTERNET AND SOCIAL MEDIA
CONSIDERATIONS
Scrubbing the Internet of the Franchise Relationship
 Start with company controlled websites
 Develop a plan with the cooperative franchisee to identify
and correct web material
 Takes steps with popular sites that allow visitors to
report updated information
 Consider prohibiting franchisee independent websites
 Address other social media sites such as Facebook and
Twiter
8
Questions?
9

Significant Considerations for Effective Franchise

Transcription

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