The recently reported scandal involving the BurgerIM® franchise system apparent implosion, has refocused a bright spotlight on the question, “How is a franchisor able to perpetrate a fraud within the fabric of franchising regulations in America?”
Have you ever heard the expression caveat emptor? It means “buyer beware.” For much of U.S. history, caveat emptor was the name of the game in consumer protection. Businesses, hucksters, and snake oil salesmen of all stripes could sell whatever they wanted and make any claims they wanted about their products. It was up to the buyer to make sure they got a fair deal.

In the wake of bombshell revelations (reported on January 20th in Restaurant Business Online, “The BurgerIM Disaster”) of hundreds of franchisees not receiving promised services and support, and serious allegations of fraud, mismanagement, and misappropriation of franchisee funds, scores of BurgerIM franchisees have launched the BurgerIM Franchisees Chapter of the AAFD. The association has quickly established a steering committee, a membership committee, and a bylaws committee. It is preparing to elect a board of directors and is rapidly increasing its membership.   

Last year’s AAFD Franchisee Leadership Summit and Annual Conference was a rousing success. We achieved a lot in 2019, but the fight for fair franchising is far from over! 

We need to keep the momentum going to further empower franchisees and protect the equity they work so hard to build in their franchise businesses. Join us this October in Mesa, Arizona for the AAFD’s 2020 Franchisee Leadership Summit and Annual Conference. 

The AAFD’s was founded in 1992 in reaction to an ongoing degradation and deterioration of franchisee rights and equity that had been evolving for many years. The actual premise for my book, The Franchise Fraud, first published in 1994, was that the then modern-day franchise falsely represented that franchising was (and is) a safe and secure path the business ownership. In fact, then (and now) the ‘modern’ franchise is more business rental than business ownership, and most franchise agreements grant the right to ‘operate’ (not own) the franchised business.

Answer: When businesses face challenges getting enough employees to participate in their health insurance benefit (enough to meet the minimum participation rate set by the insurance company), they often use a so-called “carve-out” to offer the benefit to a smaller subgroup of employees.

Under Fire in Federal Court: Can a claim of racial discrimination be forced to arbitration?

United States Court of Appeals for the Second Circuit in New York recently ruled in a very interesting case our firm is handling that may have far reaching effects with respect to racial discrimination in granting franchises and, more broadly, on the right of franchisors to enforce arbitration clauses against prospective franchisees.