The Patient Protection and Affordable Care Act is a federal statute that was signed into law on March 23, 2010. Along with the Health Care and Education Reconciliation Act of 2010 (signed into law on March 30, 2010), the Act is the product of the health care reform agenda.
One provision of this Act requires restaurants or similar food establishments that are part of a chain with 20 or more locations (regardless of the ownership of the 20 locations) to disclose, with certain exceptions, nutritional information. The new law requires covered restaurants to display the number of calories contained in standard menu items on the menu listing the item for sale and on menu boards (including drive-thru). This information also must be available in a written form on the premises and the menu listings must indicate that this information is available on premise. Restaurants also must display a succinct statement concerning suggested daily caloric intake, as specified by the Secretary of Health and Human Services by regulation, to enable the public to understand the significance of the provided nutrition information.
Covered restaurants will have to comply with the Act’s labeling provisions when the Food and Drug Administration completes its implementing regulations. The FDA’s proposed regulations must be published by March 20, 2011. The Act required these provisions to be fully implemented by January 1, 2014.
Monday, September 20, 2010
Tuesday, September 7, 2010
North Carolina Bill Would Amend Business Opportunity Act to Include Franchises
North Carolina has a pending bill, called the North Carolina Franchisee and Business Opportunity Purchasers Protection Act, that would require franchisors to comply with the FTC Franchise Rule.
If passed, franchisors will have to file 2 copies of the required disclosure document with the North Carolina Secretary of State. One of the remedies afforded to franchisees under the bill is the right to void the agreement (in addition to seeking damages) in cases involving untrue or misleading statements, disclosure violations, or other noncompliance. The bill provides for certain exemptions that mirror those in the FTC Franchise Rule and for large franchisors.
A franchisor will have to establish either a surety bond or trust account if the franchisor makes any of the following representations in the pre-sale process: (1) that the prospective franchisee will derive income from the franchise that exceeds the price paid for the franchise; or (2) that the franchisor will refund all or part of the price paid for the franchise, or repurchase any of the products, equipment, supplies or chattels supplied by the franchisor if the franchisee is unsatisfied and pays to the seller an initial, required consideration that exceeds $200. This last provision is troublesome for franchisors that offer to refund some or all of the initial franchise fee if the franchisee fails the initial training program or is unable to locate a suitable site in a timely manner.
House Bill 2036 passed its first reading and was referred to the Committee on Commerce, Small Business, and Entrepreneurship on May 26, 2010.
If passed, franchisors will have to file 2 copies of the required disclosure document with the North Carolina Secretary of State. One of the remedies afforded to franchisees under the bill is the right to void the agreement (in addition to seeking damages) in cases involving untrue or misleading statements, disclosure violations, or other noncompliance. The bill provides for certain exemptions that mirror those in the FTC Franchise Rule and for large franchisors.
A franchisor will have to establish either a surety bond or trust account if the franchisor makes any of the following representations in the pre-sale process: (1) that the prospective franchisee will derive income from the franchise that exceeds the price paid for the franchise; or (2) that the franchisor will refund all or part of the price paid for the franchise, or repurchase any of the products, equipment, supplies or chattels supplied by the franchisor if the franchisee is unsatisfied and pays to the seller an initial, required consideration that exceeds $200. This last provision is troublesome for franchisors that offer to refund some or all of the initial franchise fee if the franchisee fails the initial training program or is unable to locate a suitable site in a timely manner.
House Bill 2036 passed its first reading and was referred to the Committee on Commerce, Small Business, and Entrepreneurship on May 26, 2010.
North Carolina Bill Pending Would Add Reporting Requirement For Franchisors
North Carolina has a bill pending that would require franchisors to report certain information about their North Carolina franchisees, similar to the law that was enacted in New York last year. Under the bill, a covered taxpayer would have to file an annual report by May 1 of each year. The annual report would have to include: the gross sale of each franchise located in North Carolina (as each franchisee reported to the franchisor), the total amount of sale by the franchisor to the franchisee itemized by franchisee, and the income of each franchise located in North Carolina (as each franchisee reported to the franchisor).
As written, the bill is vague on the covered franchisors, referring to them only as “taxpayers,” without any further clarification. Therefore it is unclear on whether a franchisor that does not have to file tax returns in North Carolina would be considered a “taxpayer,” although the drafters of the bill probably intended to include all franchisors that have franchises in North Carolina.
House Bill 2001 passed its first reading and was referred to the Committee on Commerce, Small Business, and Entrepreneurship on May 26, 2010.
As written, the bill is vague on the covered franchisors, referring to them only as “taxpayers,” without any further clarification. Therefore it is unclear on whether a franchisor that does not have to file tax returns in North Carolina would be considered a “taxpayer,” although the drafters of the bill probably intended to include all franchisors that have franchises in North Carolina.
House Bill 2001 passed its first reading and was referred to the Committee on Commerce, Small Business, and Entrepreneurship on May 26, 2010.
New Jersey Expands Franchise Practices Act
New Jersey amended its Franchise Practices Act by expanding the definition of "place of business." This change was effective immediately on signing on January 16, 2010.
The new definition of “place of business” is: a fixed geographical location at which the franchisee displays for sale and sells the franchisor's goods or offers for sale and sells the franchisor's services. Place of business shall not mean an office, a warehouse, a place of storage, a residence or a vehicle, except that with respect to persons who do not make a majority of their sales directly to consumers, "place of business" means a fixed geographical location at which the franchisee displays for sale and sells the franchisor's goods or offers for sale and sells the franchisor's services, or an office or a warehouse from which franchisee personnel visit or call upon customers or from which the franchisor's goods are delivered to customers.
This expanded definition now includes wholesale distribution businesses that deliver their products to their customers, rather than having the customers come to the distributor’s place of business.
The new definition of “place of business” is: a fixed geographical location at which the franchisee displays for sale and sells the franchisor's goods or offers for sale and sells the franchisor's services. Place of business shall not mean an office, a warehouse, a place of storage, a residence or a vehicle, except that with respect to persons who do not make a majority of their sales directly to consumers, "place of business" means a fixed geographical location at which the franchisee displays for sale and sells the franchisor's goods or offers for sale and sells the franchisor's services, or an office or a warehouse from which franchisee personnel visit or call upon customers or from which the franchisor's goods are delivered to customers.
This expanded definition now includes wholesale distribution businesses that deliver their products to their customers, rather than having the customers come to the distributor’s place of business.
Virginia Clarifies Requirement for Current Financial Statements In FDD
Virginia made a change to the Regulations under its Retail Franchising Act, effective July 1, 2010. The new requirement is that the audited financial statements must be current within 120 days of the date of filing for initial or renewal franchise registrations. If the audited financial statements are not current within this time period, the franchisor must include in its FDD the franchisor’s unaudited financial statements that are current within 120 days. The unaudited financial statements must be prepared in accordance with generally accepted accounting practices.
Since many states already have this requirement, the Virginia change should not present any new problems for franchisors desiring to register or renew a registration in Virginia. You simply must remember to include the unaudited statements in your FDD if your audited financial statements are dated more than 120 days before the date you file your initial or renewal registration.
Since many states already have this requirement, the Virginia change should not present any new problems for franchisors desiring to register or renew a registration in Virginia. You simply must remember to include the unaudited statements in your FDD if your audited financial statements are dated more than 120 days before the date you file your initial or renewal registration.
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