tag:blogger.com,1999:blog-28347407817587975322024-02-18T18:45:13.139-08:00Franchise & DistributionFranchise & Distribution GroupUnknownnoreply@blogger.comBlogger9125tag:blogger.com,1999:blog-2834740781758797532.post-83863997408806563172013-01-15T12:17:00.002-08:002013-01-15T12:22:53.974-08:00Employment Law Update: What you don't know CAN hurt you<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: "Helvetica Neue",Arial,Helvetica,sans-serif; font-size: large;">HR directors and employers will want to ring in the new year with a <span style="color: #cc0000;">free employment law update and breakfast</span> given by our partner, <a href="http://www.moyewhite.com/ourattorneys/Elizabeth-Getches/" target="_blank">Liza Getches</a>.</span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;"><br /></span>
<span style="font-family: "Helvetica Neue",Arial,Helvetica,sans-serif; font-size: large;">To register online for this event <a href="http://events.r20.constantcontact.com/register/event?llr=dmcshugab&oeidk=a07e6ug64il59a1a284&condition=SO_OVERRIDE" target="_blank">click here</a>, then click the "Register Now" button (Registration deadline is 31 January 2013). We hope to see you all there! </span><br />
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<br />Unknownnoreply@blogger.comtag:blogger.com,1999:blog-2834740781758797532.post-72449213482508814382012-06-27T13:57:00.000-07:002012-06-27T14:02:06.336-07:00Coverall Precedent Spreads To Other Franchise Cleaning Systems – “Independent Contractors” Found To Be Mere Employees<br />
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<i style="mso-bidi-font-style: normal;">By <a href="http://www.moyewhite.com/ourattorneys/William-Jones/">William F. Jones</a></i></div>
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In early June 2012, the United States District Court for Massachusetts
issued a <a href="http://www.bluemaumau.org/files/Jani-King%20-%20transcript%20of%20summary%20judgment%20order.pdf">summary
judgment ruling</a> which expands and applies the precedent in the <i style="mso-bidi-font-style: normal;"><a href="http://scholar.google.com/scholar_case?case=3606384198981526621&hl=en&as_sdt=2&as_vis=1&oi=scholarr">Coverall</a></i>
employee-independent contractor litigation to yet another large corporate
cleaning franchise. </div>
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Jani-King is a large national cleaning franchise system, and
it is a competitor of Coverall with similar business operations. A putative class of plaintiffs (represented
by the same plaintiffs’ counsel who participated in the <i style="mso-bidi-font-style: normal;">Coverall</i> litigation) filed similar claims against Jani-King
alleging misclassification of Jani-King franchisees as independent contractors,
rather than employees.</div>
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On cross-motions for summary judgment, Chief Judge Mark L. Wolf
followed the precedent in <i style="mso-bidi-font-style: normal;">Coverall</i>
holding that Jani-King’s franchisees were not independent contractors but
actually employees under Massachusetts law.
Crucial to the court’s finding was the applicable Massachusetts law
which requires an independent contractor to not be conducting the same business
as their putative employer. In the
Jani-King case, the court found that Jani-King was engaged in commercial
cleaning services, and this was the identical business to which its franchisees
were engaged in as well. Because of this
factor, the court, relying on the <i style="mso-bidi-font-style: normal;">Coverall</i>
precedent, found that the franchisees were employees rather than independent
contractors. The court also appeared to
rely on the fact that Jani-King directly handled customer contracting and
accounts as well as customer billing for its franchisees as an aspect of why the
franchisees were actually employees rather than independent contractors.</div>
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Although not entirely unexpected given the similarity
between Coverall’s and Jani-King’s businesses, this ruling shows that the
impact of the <i style="mso-bidi-font-style: normal;">Coverall</i> decision on
other franchise systems continues to grow.
Franchise systems should carefully review their business operations to
ensure that their business practices do not create unexpected liability for
misclassification claims.</div>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-2834740781758797532.post-16229669077433951082012-06-15T12:45:00.004-07:002012-06-27T14:03:38.135-07:00Firehouse Subs Gets Burned On Suit For Trademark Infringement<br />
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<span style="font-size: small;"><i><span style="font-family: "Times New Roman","serif"; line-height: 115%;">By </span><a href="http://www.moyewhite.com/ourattorneys/Chesley-Culp/"><span style="font-family: "Times New Roman","serif"; line-height: 115%;">Bud
Culp</span></a></i></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; line-height: 115%;">Franchisors are well-advised to vigorously protect
their brand name, one of a franchisor’s most valuable assets. However, before filing suit against a
franchisee for using a franchisor’s trademark, a franchisor needs to make sure its
own intellectual property house is in order, or, as Firehouse Subs recently
learned, the lawsuit may backfire.</span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; line-height: 115%;">In <i style="mso-bidi-font-style: normal;">Firehouse
Restaurant Group, Inc. d/b/a Firehouse Subs v. Scurmont LLC</i>, Case No.
4:09-CV-00618-RBH, Bus. Franchise Guide (CCH) 14,738 (D.S.C. Oct. 17, 2011), Firehouse
Subs sued two South Carolina franchisees for trademark infringement for
operating two non-franchise restaurants using names incorporating the Firehouse
mark. The franchisees fought fire with
fire: seeking a declaratory judgment
that they had not infringed the marks, and filing a counterclaim seeking to
cancel Firehouse’s trademark due to its alleged fraud on the U.S. Patent &
Trademark Office (USPTO) when Firehouse obtained its mark. At trial, the jury agreed with the
franchisees, finding that the defendants had not infringed Firehouse Subs’
trademarks, and that Firehouse Subs had </span><a href="http://www.bluemaumau.org/files/Firehouse%20v.%20Scurmont%20JURY%20VERDICT%2019%20Aug%202011.pdf"><span style="font-family: "Times New Roman","serif"; font-size: 12pt; line-height: 115%;">defrauded</span></a><span style="font-family: "Times New Roman","serif"; font-size: 12pt; line-height: 115%;">
the USPTO. </span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; line-height: 115%;">Firehouse Subs tried to douse the flames, filing a motion
for a new trial, or, alternatively, for a new trial. However, the U.S. District Court for South
Carolina upheld the jury verdict. The
court found that the franchisees had presented adequate evidence that Firehouse
Subs knew of a restaurant in Florida operating under the name “Firehouse Grill
& Pub” at the time it filed its application for its trademark; however,
Firehouse had falsely represented to the USPTO that no other party had the
right to use the “Firehouse” mark.
Moreover, in light of evidence that Firehouse Subs unsuccessfully sought
to obtain a coexistence agreement with the owners of “Firehouse Grill &
Pub” (showing that Firehouse Subs was concerned about the possibility of
confusion with the Firehouse Subs trademark), the court also affirmed the
jury’s award of nearly $250,000 in attorneys’ fees to the franchisees because
the jury’s finding of fraud upon the USPTO rendered the case “exceptional”
under the Lanham Act. </span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; line-height: 115%;">Firehouse Subs has appealed the jury’s verdict.</span></div>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-2834740781758797532.post-29545673934705453632012-04-14T05:59:00.002-07:002012-04-14T06:01:48.706-07:00Mandatory Loss Leaders Travel North Of The Border<a href="http://www.moyewhite.com/ourattorneys/William-Jones/" target="_blank"><span style="font-size: medium;"><i><span id="article_author">By </span></i></span></a><span style="font-size: medium;"><i><span id="article_author"><a href="http://www.moyewhite.com/ourattorneys/William-Jones/" target="_blank">William F. Jones</a></span></i></span><br />
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Recent litigation in the United States has examined issues
relating to franchise systems imposing price ceilings on items sold by franchisees,
even when those ceilings mandate that items are sold at a loss. In a notable case, <i style="mso-bidi-font-style: normal;">National Franchisee Association v. Burger King Corp.</i>, the United
States District Court for the Southern District of Florida in 2010 affirmed the
right of Burger King to impose a $1 price ceiling on its “Buck Double” cheeseburger, even though the cost to
franchisees producing that cheeseburger were higher than $1. Essentially, the court agreed with Burger King’s
argument that enforcing such price ceilings is a reasonable strategy to draw in
other customers in to purchase higher price items, essentially acting as a
“loss leader” to benefit overall store sales.</div>
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This legal precedent for allowing franchisors to enforce
maximum, below-cost price ceilings appears to have migrated north of the
border. Recently, an association of Tim
Horton’s franchisees filed a class action against the franchisor requirement
that franchisees sell lunch item menus for less than cost. Echoing the holding in the <i style="mso-bidi-font-style: normal;">Burger King</i> case, the Canadian court
embraced Tim Horton’s arguments that the applicable analysis involves the overall
profitability of the franchise store, rather than the individual profitability
of a single item. The court found that
it was commercially reasonable for Tim Horton’s to adopt and enforce a strategy
on its franchisees to use below cost lunch menu item as a loss leader to bring
in customers and create additional profit on other items.</div>
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The adoption of the “loss leader” concept in the context of
maximum price ceilings in the Canadian courts may demonstrate a trend towards
greater franchisor control and discretion and the pricing of specified menu
items system-wide.</div>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-2834740781758797532.post-29774125609866081512012-04-14T05:50:00.002-07:002012-04-14T06:02:00.006-07:00Update On The Coverall Employee-Independent Contractor Litigation<b style="mso-bidi-font-weight: normal;"><u><span style="text-decoration: none;"></span></u></b><br />
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<span style="font-size: medium;"><i><span id="article_author">By <a href="http://www.moyewhite.com/ourattorneys/William-Jones/" target="_blank">William F. Jones</a></span></i></span><br />
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<span style="font-size: medium;"><i><span id="article_author"> </span></i></span>A major case of interest in the franchise industry continues
to wind its way through the federal district court and state courts in
Massachusetts. In <a href="http://scholar.google.com/scholar_case?case=3606384198981526621&hl=en&as_sdt=2&as_vis=1&oi=scholarr" target="_blank"><i style="mso-bidi-font-style: normal;">Awuah v. Coverall</i></a> (the “<i>Coverall </i>case”, the core dispute involves whether Coverall franchisees
are actually classified as employees, rather than independent contractors. More explanation of the core dispute is covered
in a prior blog entry, “Franchisees: Independent Contractors or Employees?” by
Bud Culp, posted below.</div>
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In the <i>Coverall </i>case, presiding federal district court has now
entered an order defining the damages that the Coverall franchisees who were
misclassified as independent contractors rather than employees will ultimately
receive. The successful plaintiff
franchisees are allowed to recover damages against Coverall which include
refunds of their initial franchise fees, additional business fees and insurance
deductions. Also, the plaintiff
franchisees can recover any unreimbursed chargebacks and interest on late
payment of reimbursed chargebacks. </div>
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Most importantly, however, the judge issued an order which
trebled the damages assessed against Coverall.
The court took this action under the prior 2007 version of the
applicable Massachusetts statute which makes treble damages discretionary. The judge’s order trebles damages against
Coverall for successful plaintiff-franchisees dating back to 2006. </div>
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It is important to note that revisions to the Massachusetts
statute in 2008 now make the trebling of damages for misclassification
mandatory, rather than discretionary.
This change in the law, along with <i>Coverall </i>case precedent, should
impress upon franchise systems the importance of properly evaluating any
potential exposure they may face on the issue of whether their franchisees can
be classified as employees, rather than independent contractors.</div>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-2834740781758797532.post-86022175851413858492012-03-24T08:48:00.000-07:002012-03-25T10:05:16.169-07:00Tough Economic Times Increase The Potential For Franchisor Tort Liability Claims<div style="font-family: inherit;">
<span style="font-size: large;"><i><span id="article_author">By <a href="http://www.moyewhite.com/ourattorneys/William-Jones/" target="_blank">William F. Jones</a></span></i></span></div>
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<span style="font-family: verdana,arial; font-size: x-small;"><span id="article_synopsis"><span style="font-size: 12px;"><span style="font-family: Arial;">The
tough economic conditions in our country have had a significant impact
on most businesses, but the impact felt by franchise systems has been
particularly acute. The continued slow pace of economic growth has
placed, and continues to place, additional pressures on franchisees,
particularly food and retail franchisees operating in industries with
tight profit margins.</span></span></span></span><br />
<span style="font-family: verdana,arial; font-size: x-small;"><span id="article_synopsis"><span style="font-size: 12px;"><span style="font-family: Arial;"> </span></span>
</span></span><br />
<span style="font-family: verdana,arial; font-size: x-small;"><span style="font-size: 12px;"><span style="font-family: Arial;">These
economic realities can manifest themselves in unexpected ways. One way
is an upswing in claims against franchisors for tort liability arising
out of the actions or inactions of its franchisees or its franchisees'
employees. Although a franchisor may think of its franchisees as
independent businesses that will be responsible for their own tort
liability, the plaintiff's bar sees things differently. </span></span></span><br />
<br />
<span style="font-family: verdana,arial; font-size: x-small;">
<span style="font-size: 12px;"><span style="font-family: Arial;">Particularly
in tough economic times, a franchisor makes an attractive target for
plaintiffs seeking to impose tort liability for the benefit of an
injured client. Plaintiff's counsel suing franchisors for the alleged
torts of its franchisees generally fall into three categories. First,
franchisors typically represent the proverbial "deep pocket." The very
success that a franchise system obtains in increasing the strength of
its brand and marketing has the converse effect of having it appear to
be an attractive "deep pocket" to the plaintiff's bar. </span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">Second,
the economic pressures on a franchisee may make the franchisor the only
viable tort target. Although most franchisees are required to carry
insurance coverage, one byproduct of the tough economic times is that
many more franchisees are failing to meet this obligation, failing to
pay premiums, and going out of business. This situation may mean that
the franchisee is no longer a viable target for a tort suit, leaving the
franchisor as the only viable target for plaintiff's counsel. </span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">Third,
plaintiff's counsel often include a franchisor in an attempt to obtain
some money for the "hassle factor." Whereas most franchisors limit the
scope of litigation with franchisees through forum selection clauses in
the franchise agreement, those venue and governing law provisions have
no application to third-party tort claims. The prospect of being
dragged into state court in any number of jurisdictions also places
pressure on the franchisor to attempt to offer a nominal settlement to
avoid the cost and expense of litigating in a far-away forum.
Plaintiff's counsel often recognizes this reality, and takes advantage.</span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">It is
standard practice in a franchise agreement for a franchisor and a
franchisee to agree in writing that the franchisee is an independent
business operating free from direct control of the franchisor. Most
franchise systems recognize this reality in their operations, and
franchise systems see their franchisees as independent businesses. This
perception and the specific terms of the franchise agreement, however,
are not the primary considerations of a court assessing whether a
franchisor has liability for the torts of a franchisee or the
franchisee's employees. </span></span></span><br />
<span style="font-family: verdana,arial; font-size: x-small;"><br />
<span style="font-size: 12px;"><span style="font-family: Arial;">Most
courts do not have extensive experience with franchises and franchise
litigation. Consequently, case law tends to focus on traditional
concepts of agency law to examine whether a franchisor bears tort
liability for the acts of its franchisee. The courts examining these
questions tend to focus on concepts of actual and apparent agency in
making their determination.</span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">Actual
agency applies the traditional principal-agent doctrine to the
franchisor-franchisee relationship. In essence, courts examine whether
the franchisee is merely the "agent" for the franchisor. As with most
traditional analysis of principal and agent concepts, the dispositive
factor comes down to control. The courts examine the extent to which a
franchisor exercises the requisite "control" over its franchisee.</span></span></span><br />
<span style="font-family: verdana,arial; font-size: x-small;"><br />
<span style="font-size: 12px;"><span style="font-family: Arial;">Under
an "apparent agency" theory, the analysis differs in several important
respects. Courts examine whether or not the franchisee was held out as
the agent of the franchisor. Particular concern is given to what
actions the franchisor as the putative principal took to clothe the
franchisee as an agent for purposes of the tort victim. Again, the key
consideration in which courts engage is to determine what "control" the
franchisor ultimately exercises over the franchisee in its interaction
with the tort victim.</span></span><br />
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</span><br />
<div style="color: blue;">
<span style="font-family: verdana,arial; font-size: x-small;"><span style="font-size: small;"><span style="font-family: Arial;"><b><i>The "Control" Test</i></b></span></span></span></div>
<span style="font-family: verdana,arial; font-size: x-small;">
<span style="font-size: 12px;"><span style="font-family: Arial;">In
addressing potential tort liability of a franchisor for the acts of a
franchisee, courts analyze the degree of control that a franchisor
exercises over "day-to-day" operations of the particular franchisee.
Analysis includes determining whether a franchisor controls the daily
business operation and practices at a franchisee, including hiring and
firing employees, supervision of cleanliness and hygiene standards, and
implementation of employment and other policies. It is within these
examinations of the actual "control" exercise by a franchisor that a
natural tension arises between the franchisee's status as an independent
business and the franchisor's legitimate concerns in protecting the
integrity of its system.</span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">A
franchise agreement typically specifies that the franchisee is an
independent and separate business. The franchise agreement also
typically specifies that the franchisee is responsible for both the
operations of its business and matters relating to the hiring, firing
and supervision of employees.</span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">A
closer examination, however, often reveals that a franchisor is not
actually as hands-off in practice as the language of the franchise
agreement may suggest. Franchisors have legitimate interest in
protecting their unique business system by ensuring that franchisees are
in compliance with system requirements. The whole system of
franchising as a business model is that the franchisor creates a
business system consisting of licensed marks, brand recognition and
operations to ensure consistency among its franchisees throughout the
system. </span></span></span><br />
<br />
<span style="font-family: verdana,arial; font-size: x-small;"><span style="font-size: 12px;"><span style="font-family: Arial;">Although consistency is a legitimate goal of a franchisor,
there are traps for the unwary in a franchise system which attempts to
control the operation of its franchisee's business too closely. For
example, a franchisor may require franchisees to take certain
operational steps to ensure that franchisee businesses across the
country are run in a similar fashion. These methods of business,
however, can be construed to be a level of "control" over the
franchisee's business which could result in imposing tort liability.
When courts analyze these questions, they do not allow the franchisor to
have it both ways. If a franchisor dictates the precise method by
which a franchisee operates it business, this direction may form the
basis for establishing the necessary control such that the franchisor is
responsible for the franchisee's tort liability.</span></span><br />
<br />
</span><br />
<div style="color: blue;">
<span style="font-family: verdana,arial; font-size: x-small;"><span style="font-size: small;"><span style="font-family: Arial;"><b><i>The Causal Nexus</i></b></span></span></span></div>
<span style="font-family: verdana,arial; font-size: x-small;">
<span style="font-size: 12px;"><span style="font-family: Arial;">The
analysis by courts of potential franchisor tort liability does not
solely relate to a generalized question of the extent to which a
franchisor controls its franchisees' businesses. Courts examining this
question often look for a causal nexus between the control exercised by a
franchisor and the conduct upon which the plaintiff bases its claimed
injury. Even if a franchisor exercises substantial control over its
franchisee's business methods, liability for tort breaks down if the
alleged conduct is separate and apart from the areas of the business the
franchisor controls closely. </span></span></span><br />
<br />
<span style="font-family: verdana,arial; font-size: x-small;"><span style="font-size: 12px;"><span style="font-family: Arial;">At a basic level, if a franchisor
provides substantial direction and oversight to all franchisees on the
manner on which they hire and fire employees, that franchisor may be
subject to tort liability for claims arising out of employment issues.
This analysis, however, may have no bearing on a tort claimant whose
claim has nothing to do with the hiring and firing practices of the
franchisee. This is an area where defense counsel can take action to
protect franchisors from tort liability. It is crucial that counsel for
a franchise drive a wedge between those aspects of the franchise
relationship where the franchisor exercises control and the specific
conduct of the franchisee which may cause the alleged torts. Without a
causal nexus between control and the alleged injury, franchisors may
escape liability for the acts of their franchisees.</span></span><br />
<br />
</span><br />
<div style="color: blue;">
<span style="font-family: verdana,arial; font-size: x-small;"><span style="font-size: small;"><span style="font-family: Arial;"><b><i>Practice Pointers</i></b></span></span></span></div>
<span style="font-family: verdana,arial; font-size: x-small;">
<span style="font-size: 12px;"><span style="font-family: Arial;">For
general tort liability, the majority of applicable law appears to
support arguments from the franchisor which distances franchisors from
tort liability for the actions of franchisees or their employees. If
operating in accordance with the franchise agreement, a typical
franchise system minimizes potential liability.</span></span><br />
<span style="font-size: 12px;"><span style="font-family: Arial;">The
challenge for a franchisor and its lawyers is to find a way to raise
this issue in court in an early and effective manner. Often, issues of
control are extremely fact specific, making it difficult for a
franchisor to effectively raise its defenses in the preliminary stages
of litigation. This forces the franchisor to endure substantial costs
related to its defense prior to dismissal through a motion for summary
judgment.</span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">To
minimize risk, the franchise system should review as appropriate its
insurance requirements on franchisees. Although insurance requirements
may be contained in the franchise agreement, it is crucial for a
franchise system to have procedures in place to review the applicable
insurance and to ensure that the franchisee has the requisite insurance
in place. Requirements for the franchisees to furnish evidence of
insurance, having the franchise system named as an additional insured,
or requiring notification directly to the franchisor of notices of
non-payment or potential cancellation, are several tools that a
franchise system can use to ensure that the franchisee has effective
insurance available for potential tort suits.</span></span><br />
<br />
<span style="font-size: 12px;"><span style="font-family: Arial;">Lastly,
franchise systems should take a good hard look at the elements of
control they exercise over their franchisees. Franchise systems should
analyze whether the control actually exercised is consistent with the
core business strategy and functions of the franchise system, rather
than control which is not necessary to the business model. To the
extent a franchise system can reduce its control over the franchisees
and their actions in a way that does not detract from the business
model, this change in operation will minimize the ability of the
plaintiff's bar to pursue a franchisor for the tort actions of its
franchisees or employees.</span></span></span>Unknownnoreply@blogger.comMoye White LLP 1400 16th St, Denver, CO 80202, USA39.7499582 -104.99879239.7484322 -105.00125949999999 39.7514842 -104.9963245tag:blogger.com,1999:blog-2834740781758797532.post-50082028752986842632012-03-21T09:00:00.000-07:002012-03-25T10:12:04.020-07:00Franchisees: Independent Contractors or Employees?<br />
<div class="BodyText0" style="font-family: inherit;">
<span style="font-size: large;"><i>By <a href="http://www.moyewhite.com/ourattorneys/Chesley-Culp/" target="_blank">Bud Culp</a></i> </span></div>
<div class="BodyText0">
<br /></div>
<div class="BodyText0">
<span style="font-family: "Calibri","sans-serif"; font-size: small;">A series of court rulings in Massachusetts have challenged
the assumption that franchisees are independent contractors and not
employees. In the most recent case, the
Massachusetts Supreme Judicial Court held that a franchisee for a commercial
cleaning service, misclassified by the franchisor as an independent contractor
instead of an employee, was entitled to recover damages for franchise fees and
insurance premiums deducted from his “wages.”
<i>Awuah v. Coverall North America,
Inc.</i>, 460 Mass. 484 (August 31, 2011). </span></div>
<div class="BodyText0">
<span style="font-size: small;"><br /></span></div>
<div class="BodyText0">
<span style="font-family: "Calibri","sans-serif"; font-size: small;">Coverall franchisees enter into a franchise agreement to
provide commercial janitorial services to third-party customers. Coverall contracts directly with the
customers to provide cleaning services, bills the customers, and pays the
franchisee for services after deducting franchise royalties and insurance
payments. The court found that this
procedure improperly deferred payment of wages and that the Coverall system, in
effect, required employees to “buy their jobs” in violation of public
policy. <i>Id </i>at 497-98.</span></div>
<div class="BodyText0">
<span style="font-size: small;"><br /></span></div>
<span style="font-family: "Calibri","sans-serif"; font-size: small;">While
the contract structure of <i>Coverall</i>
differs from that used in most franchise relationships, franchisors should
analyze their business model to determine whether its franchisees may be
considered independent contractors in the states in which they do
business. Franchisors should consider
changing a model in which the franchisor, and not the franchisee, bills the
customer and collects payment.
Franchisors should also consider granting franchise rights from a
different company than the legal entity that operates any company-owned
units. Otherwise, franchisors may
inadvertently find their franchisees have been transformed into employees and
themselves liable under labor, tax and other laws for workers’ compensation and
damages.</span>Unknownnoreply@blogger.comMoye White LLP 1400 16th St, Denver, CO 80202, USA39.7499582 -104.99879239.7484322 -105.00125949999999 39.7514842 -104.9963245tag:blogger.com,1999:blog-2834740781758797532.post-56081925330508443872012-03-17T09:00:00.000-07:002012-03-25T10:11:34.713-07:00Guide to Brands of the IP Frontier<span style="font-family: inherit; font-size: large;"><i>By <a href="http://www.moyewhite.com/ourattorneys/Charles-Luce/">Charles F. Luce, Jr.</a></i></span><a href="http://www.moyewhite.com/ourattorneys/Charles-Luce/" target="_blank"><b><span style="background-color: #0b5394;"> </span></b></a><br />
<div style="color: #990000;">
<br /></div>
<span style="font-size: large;"><b style="color: #990000;">The Bar Lazy J. The Long X. The Flying Crown. </b><b> </b></span>These
famous brands still stir images of the Old West. Sizzled on the hides of
livestock, the hallmark of a good brand was that it was instantly
identifiable and difficult to alter. A good brand says, <i>“This is mine, back off!” </i><br />
<br />
Brands and brand protection are still important in the New West: the
IP Frontier. Just survey your chuck wagon (pantry) or the aisle of any
Kroger or Costco, Pardner, and you’ll see what I mean. So here is your
guide to the Brands of the IP Frontier.<br />
<br />
<div style="color: blue;">
<span style="font-size: x-large;"><b>©</b></span></div>
This brand denotes the owner claims copyrights in the material on
which it is used. A copyright notice consists of the copyright symbol,
followed by the year the claimed work was first published the name of
the copyright claimant, e.g., © 2012 Moye White LLP.<br />
<br />
Prior to 1989, the
failure to use this brand usually caused an otherwise copyrighted work
to be lost to public domain. Not so since 1989, when the United States
became a full signatory to the Berne Convention. However, since not all
countries are Berne Convention members, use of this brand is still a
good idea if you don’t want your copyrights to be rustled.<br />
<br />
<div style="color: blue;">
<span style="font-size: large;"><b>TM</b></span></div>
The brand ™ is an unofficial notice that the word(s) and/or design on
which it is affixed is considered a trademark. Because ™ is an
unofficial brand there are no rules governing its use. By custom the
small capital letters ™ are typically used as a superscript or subscript
immediately adjacent to the material claimed to be a trademark.<br />
<br />
While
the use or failure to use ™ carries no legal weight or penalty, it is
effective in drawing attention to a claim of common law trademark
rights, particularly when the claimed mark might otherwise not be
recognized to be considered proprietary, e.g., The Little Bakery™.<br />
<br />
<div style="color: blue;">
<span style="font-size: large;"><b>SM</b></span></div>
This more rarely seen brand, an abbreviation of “service mark,”
serves the same function as ™, except most people haven’t a clue what it
means.<br />
<br />
The correct usage of SM to demonstrate that one knows the
difference between a product and a service might warrant a gold star
from a trademark professor. But since service marks are subsumed within
the definition of “trademark,” and the whole point of IP branding is to
provide notice, this wrangler thinks anyone who uses SM is a sissy.<br />
<br />
<div style="color: blue;">
<span style="font-size: x-large;"><b>®</b></span></div>
This brand connotes that the owner has registered its mark with the
United States Patent and Trademark Office. The recovery of damages under
the Trademark Act is dependent upon its consistent use. Conversely,
using the registered trademark symbol without having an actual trademark
registration is consumer fraud and can be the basis for denying an
application for registration.<br />
<br />
A surprising number of registered
trademark owners incur the time and expense to obtain the right to use
this legal brand and then never do. Given the powerful legal
presumptions accorded to the owner of a United States trademark
registration it is the opinion of this IP wrangler that someone who owns
a federal trademark registration and fails to use the official
registration symbol is plum loco.<br />
<br />
<div style="color: blue;">
<span style="font-size: large;"><b>Patent Pending </b></span></div>
Let’s get one thing straight: patents don’t <i>pend</i>. You either got a
patent or you don’t.<br />
<br />
Now that we’ve settled that, the Patent Act does
allow someone who’s filed a patent application to mark their inventions
“patent pending” to indicate that a patent application is pending.<br />
But
woe unto the varmint who uses the brand “patent pending” if a patent
application isn’t actually pending. The false use of “Patent Pending” is
prohibited by federal law.<br />
<br />
<div style="color: blue;">
<span style="font-size: large;"><b>Reg. U.S. Pat. Off. </b></span></div>
This here brand means “Registered United States Patent Office,” and
should be followed by a patent number. A U.S. patent allows a patent
holder to prevent others from making, using, selling, or leasing
inventions covered by the patent. This particular brand is required by
the Patent Act to recover damages under the Patent Act.<br />
<br />
Them’s the brands of the IP Frontier. Use them properly to protect
your intellectual property herd and be respectful when you see them used
by others.Unknownnoreply@blogger.comMoye White LLP 1400 16th St, Denver, CO 80202, USA39.7499582 -104.99879239.7484322 -105.00125949999999 39.7514842 -104.9963245tag:blogger.com,1999:blog-2834740781758797532.post-82309215867870641962012-02-18T09:00:00.000-08:002012-03-25T10:38:09.052-07:00Billy Jones to Speak at DRI on Hot Topics in Franchise Law<span style="font-family: inherit;">Moye White attorney</span>, <a href="http://www.moyewhite.com/ourattorneys/William-Jones/" target="_blank">Billy Jones</a>, will be a featured speaker at the Defense Research Institute's Business Litigation and Intellectual Property Seminar in New York, 16-18 May 2012. <br />
<br />
Billy will discuss three recent cases and their practical implications for franchisors and franchisees, including whether franchisees are truly independent contractors; state efforts to apply income tax to franchisee royalties paid to an out-of-state franchisor; and potential franchisor liability for workers' compensation injuries to a franchisee's employees.Unknownnoreply@blogger.comMoye White LLP 1400 16th St, Denver, CO 80202, USA39.7499582 -104.99879239.7484322 -105.00125949999999 39.7514842 -104.9963245