Brian Roberts, CEO of Comcast Corporation, has agreed to pay a $500,000 penalty to settle claims asserted by the Federal Trade Commission (FTC) that he violated the reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act (HSR-Act) by failing to report his acquisition of Comcast stock as part of the company’s merger with AT&T Corporation back…
Our office recently received a physical scam letter from Mrs. Tracy Gold. The fraudulent letter claims that Mrs. Tracy Gold was directed to contact our office in order to settle a loan owed to Mrs. Hillary Higgins Green. The scam letter came with fraudulent cashiers check in the amount of $145,500. Click here for more…
Item 5: Initial Fees Consistent with the UFOC Guidelines, Item 5 of the amended Rule requires the disclosure of any initial fees and any conditions on their refundability. “Initial fees” means “all fees and payments, or commitments to pay, for services or goods received from the franchisor or any affiliate before the franchisee’s business opens,…
This post is part of a series of posts designed to help you acquire a loan for your small business. The following posts cover methods for public financing of your small business Local MN Programs for Small Business Loans Minnesota Reservist and Veteran Business Loan Program Minnesota Small Business Loans: Urban Initiative Program Value-Added Producer…
Item 3: Litigation Item 3 calls for the disclosure of certain lawsuits involving the franchisor and other entities associated with the franchisor – i.e., predecessors, parents, and affiliates – in addition to certain lawsuits involving any person identified in Item 2. These are substantially similar to the disclosure requirements of the original Rule and the…
Loan Packaging Before inquiring about debt financing, an entrepreneur should assess such things as: Do you actually need more capital or can you manage existing cash flow more efficiently? How do you define your need? Do you need money to expand or as a cushion against risk? How urgent is your need? Do you want…
Item 1: The Franchisor And Any Parents, Predecessors, And Affiliates Item 1 of the amended Rule requires franchisors to disclose background information on the franchisor and any parents, predecessors, and affiliates. Unlike the UFOC Guidelines instructions for Item 1, the amended Rule does not expressly require a franchisor to refer to itself as “we,” or…
I have heard from a number of attorneys that scam artists are targeting lawyers claiming to need legal help. I have decided to posts these email messages here in case other attorneys receive them and wonder whether they are legitimate. There may be similar scams preying on other professions and businesses. How Does the Scam…
At What Point in The Sales Process Must a Franchisor Furnish The Disclosure Document? The amended Rule provides that franchisors must furnish prospective franchisees with a disclosure document at least 14 calendar days before the prospective franchisee signs a binding agreement with, or makes any payment to, the franchisor or an affiliate in connection with…
Large Franchise Investment Exemption The amended Rule exempts franchise offers and sales where the initial investment is atleast $1 million, excluding the cost of unimproved land and any franchisor (or affiliate)financing. In addition, the prospective franchisee must sign an acknowledgment that thefranchise sale is exempt from the Franchise Rule because the prospective franchisee will bemaking…
Business Licenses And Permits In General The startup, operation or expansion of a business in Minnesota may involve securing one or more business, occupational or environmental licenses or permits. Those licenses and permits fall into a number of categorical groupings according to purpose: Licenses and permits to ensure the competency of practitioners of a business,…
Definition of Franchising Franchising is a method of marketing and distributing goods and services. Franchises are offered and sold for many types of businesses, including services, retail trade, finance, real estate, transportation, and communications. A franchise is broadly defined as a contract or agreement between two or more persons by which the franchisor (the seller),…
A company selling securities to residents of the state of Minnesota must comply with federal and state securities laws. State securities laws are collectively and individually referred to as “Blue Sky Laws.” These Blue Sky Laws vary among the states, sometimes to a significant degree. It is important to note that the Minnesota Legislature recently…
ITEM 17: THE FRANCHISE RELATIONSHIP This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this disclosure document. Provision Section in franchise or other agreement Summary a. Length of the franchise term Section 1 (also Section 1 of Lease) Term is equal to…
Introduction Here is a sample cover page of a franchise disclosure document. Franchise Disclosure Document Belmont Mufflers, Inc. A Minnesota Corporation 111 First Street Jackson, Minnesota 55000 (111) 222-3333 franchiseofficer@belmont_mufflers4u.com www.belmont_mufflers4u.com Belmont Mufflers, Inc., repairs and installs motor vehicle exhaust systems. The total investment necessary to begin operation of a Belmont Mufflers franchise is $100,000….
Sample Item 21-1: Financial Statements ITEM 21: FINANCIAL STATEMENTS Attached to this disclosure document as Exhibit J are our audited, fiscal year end financials for 2005, 2006, and 2007. Attached to this disclosure document as Exhibit K are the audited, fiscal year end financials for 2005, 2006, and 2007 of subfranchisor Richard McDonald. Sample Item…
Sample Item 19-1: Financial Performance Representation (Based on Actual Historical Performance Results) ITEM 19: FINANCIAL PERFORMANCE REPRESENTATION The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included…
ITEM 13: TRADEMARKS We grant you the right to operate a shop under the name “Belmont Muffler Shop.” You may also use our other current or future trademarks to operate your shop. By “trademark,” we mean trade names, trademarks, service marks, and logos used to identify your shop. W e registered the trademark on the…
ITEM 3: LITIGATION Pending Actions Blank v. Belmont Mufflers, Inc., No. 06-111 (M.D. Fla. filed August 1, 2007). Five franchisees filed suit against us for breach of contract, alleging that we failed to furnish equipment in the time period stated in our franchise agreement. These franchisees seek damages of $350,000. A trial is scheduled for…
Table No. 1 – Systemwide Outlet Summary Table No. 1 of Item 20 presents the total number of all outlets nationwide – both company owned and franchised – operating at the beginning and at the end of each of the franchisor’s last three fiscal years. This chart should include all outlets that are substantially similar…
The “Required Payment” Element The last of the three definitional elements of a franchise covered by the amended Rule is that purchasers of the business arrangement must be required to pay to the franchisor (or to an affiliate), as a condition of obtaining a franchise or starting operations, a sum of at least $500 at-5…
Professional Entities The Minnesota Professional Firms Act, Minnesota Statutes, Chapter 319B, was enacted in 1997 and authorizes practitioners of certain licensed professions to elect to be professional firms under any one of three different forms of organization: corporations (either for-profit or nonprofit); limited liability companies; and limited liability partnerships. In the absence of the Minnesota…
The “Significant Control or Assistance” Element The amended Rule covers business arrangements where the franchisor “will exert or has the authority to exert a significant degree of control over the franchisee’s method of operation, or provide significant assistance in the franchisee’s method of operation.” When Is Control or Assistance Significant? The more franchisees reasonably rely…
Amending Articles of Organization A limited liability company may amend its articles of organization to include or modify any provision that is required or permitted to appear in the articles or to omit any provision not required to be included. Amendments are required when any changes are made in the articles of organization. The amendment…
Subsidiaries When a corporation extends into a new product line or a new geographic area, it frequently establishes a “subsidiary” corporation. A subsidiary corporation is a separate legal entity which happens to be controlled by another corporation (its “parent”) that owns enough shares of the subsidiary’s stock to dictate policy. Some subsidiaries are wholly-owned, some…
Do you need to have a disclosure or disclaimer at the end of your emails? Most people don’t. Still, some professionals (like lawyers) may want an email disclosure. Email disclosures don’t have to be long and filled with a lot of legalese. However, sometimes lawyers may prefer that to make them sound more sophisticated or…
Amending the Articles of Incorporation A corporation may amend its articles of incorporation to include or modify any provision that is required or permitted to appear in the articles or to omit any provision not required to be included in the articles. Amendments are required when any changes are made in the articles of incorporation….
Other Provisions There is no publication (i.e., no “legal advertisement”) requirement for corporations incorporated under Minnesota Statutes Chapter 302A. There is also no statutory minimum capital requirement for these corporations. There are a number of provisions of Minnesota Statutes Chapter 302A that may be altered or adopted in the articles of incorporation, but that need…
Limited Partnerships A limited partnership is a type of partnership in which the limited partners share in the partnership’s liability only up to the amount of their investment in the limited partnership. Under Minnesota’s Uniform Limited Partnership Act, the limited partnership must have at least one general partner and one limited partner. The general partner…
Determining Whether a Name is Distinguishable General Rule In general, any name which contains a different word from existing names on file with the Secretary of State is distinguishable and the name is acceptable for filing as an assumed name or as the name of a corporation or limited liability partnership or limited liability company….