The "experienced franchisor" exemption from registration - proceed with great caution

Article Abstract:

Lewis Rudnick and J. Randal Miller argued that a mature franchisor's experiential registration exemption is not revoked when the management team is dispersed during a merger, acquisition or leveraged buy out. Though this would be preferred, the franchise laws of the eight states who offer the exemption do not reflect this position. A franchisor that does not maintain an intact management team after stock or assets sales must register in Maryland, California, Rhode Island, Wisconsin, Indiana, South Dakota, North Dakota and Washington.

Acquisitions and mergers

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The case against

Article Abstract:

Requiring earnings claim disclosure can prove useless and misleading and should not be allowed. Excluding information about the competition from the information required is the most critical. Excluding crucial information can result in great liability for the seller. The rules under consideration should be revised to include actual operating results for the last three years for existing units offered for sale, the most reliable indicator of future performance.

Financial statements

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Duty to disclose purchase or sale activity

Article Abstract:

The duty to disclose franchise purchase or sale activity is discussed from both the franchise law and securities law perspectives. Practical suggestions to avoid violating the applicable requirements are given.

United States, Interpretation and construction, Securities law

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