It’s Okay to Let the Franchisee Pay

Feb 17, 2020
Every year about three hundred new franchise brands are launched in the United States alone.  The franchisee applicant pays the franchisor a franchise fee, and must also have sufficient liquidity and net worth, in order to be considered for approval of being granted a franchise. However, too often the franchisor pays for the franchisee screening report, when in fact it can be passed through to the franchisee applicant.  In fact, most franchisee applicants will actually appreciate paying for their own thorough franchisee vetting. Really, but why? The typical franchisee applicant is investing a substantial amount of their personal wealth, often approaching $500,000 to $1 million or more.   An astute business person will value a franchisor that implements a rigorous background check program to ensure that individuals with undesirable and/or dangerous criminal histories are not associated with the same brand in which they are investing their own assets.  With viral social media, brands can be destroyed or severely weakened virtually "in an instant." In order to have the franchisee pay for their own franchisee screening, it is necessary to disclose either an Application Fee or a Back…
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DOL Releases Final Joint Employer Rule – Good News for the Franchise Industry

Jan 14, 2020
On January 12, 2020, the Department of Labor (DOL) released its final rule that defines joint employer situations in a manner, so that entities such as franchisees and their franchisor will likely not be considered to be joint employers going forward. The ruling utilizes a four-factor test that analyzes if the respective company: Hires or fires the employee Supervises and controls the employee's work schedule or conditions of employment to a substantial degree Determines the employee's rate and method of pay, and Maintains the employee's personnel records. Possibly more important are the factors that will be disregarded when determining whether a joint employment situation exists.  Specifically, it is stated that a franchisor-franchisee relationship does not explicitly create a joint employer relationship. Further franchise agreements that require precise procedures, such as "best-practices" background checks, standardized human resource forms, employee handbooks, etc., also do not produce a joint employer scenario.  This is great news for franchisors who want to protect their brand with consistent policies and onboarding procedures. The new rule is expected to become e…
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Background Checks are a Marketing Advantage for Businesses

Dec 06, 2019
Businesses utilize background checks for a variety of permissible business purposes.  Listed below are just a few: Employee/Independent Contractor Screening Resident/Tenant Screening Franchisee Screening Membership Screening Client Screening Board of Director Screening Vendor Screening Volunteer Screening. Most often background checks are performed to protect against negligence liability in the hiring or selection of applicants, and the accompanying harm or injury that an applicant may inflict upon employees and/or customers of the organization.  Injurious actions by applicants need not be physical in nature.  They can take the form of financial, identity theft, and emotional harm as well. However, too often, businesses overlook the marketing value that background checks represent.  Performing consistent thorough background checks afford businesses the opportunity to differentiate themselves from their competitors.  This is true particularly when "best practices" background checks are implemented with a reliable background screening company – one that is also a consumer reporting agency – adhering to the Fair Credit Reporting Act (FCRA – the federal law that regulates…
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California Consumer Privacy Act – It May Impact Your Business

Nov 20, 2019
California, arguably the most consumer-friendly state, has once again placed itself at the forefront of legislation, this time with a law impacting data protection, by enacting – in one week from the time it was drafted – the California Consumer Privacy Act (CCPA).  If it seems reckless to pass legislation in such a short period of time, most reasonable people would probably agree. Nevertheless, this law will take effect on January 1, 2020, although the California Attorney General will not begin to enforce it until July 2020.  It will affect for-profit businesses that either have annual gross sales in excess of $25 million, or that buys/shares/receives or sells for commercial purposes personal information of fifty thousand or more consumer household devices (devices not just consumers).  There is a temporary exclusion for employee data until January 1, 2021. The CCPA provides the following rights to consumers: To know the categories of information collected To know the categories of information sold or disclosed for a business purpose Right to delete their information Right to opt-out of sale of their data to third parties Additionally, there are expansive categories of …
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