Wall Street tells us more about ourselves than perhaps we really want to know. The pandemic has challenged and brought out the best in dining, and particular quick service restaurants. The changes are not only on consumer preferences, but also in the legal structure. In order to meet the customer demands, not only did the customer experience need to change, but also the capital structures needed to change. Restaurant chains are looking more, and acting more, like tech companies. That seems today to be the formula to raise the money necessary to run and grow a restaurant chain. Let’s look at how consumer tastes steer Wall Street preferences.

The Reality of Restaurant Management.

Every restaurant has staffing shortages. The “big quit” due to Covid-19 concerns affects restaurants perhaps more than in any other industry. Restaurant workers seek higher wages and better working conditions. Unions are seeking to organize the workers of the brands and obtain legal changes to the labor law environment to accomplish these goals. Demand for a higher minimum wage scares the restaurants, many of which have suffered during the pandemic, while other restaurants has exceeded expectations. Consumers are finicky, and they want the customer experience and the quality of food despite the challenges to management in the labor environment.

Franchise Companies Listen to Consumer Preferences.

Mobile and on-line ordering saved many restaurants. With the labor concerns causing short staffing, efficient ordering saves “face time” interacting with staff and, if properly implemented, improves speed of service. During the pandemic, many consumers rather interact with an efficient touch screen than be exposed to a human order taker or service person. More than ten minutes in drive through line, or more than five minutes at a counter, irks consumers. Consumers then balk if their food is not ready within two minutes of their ordering at a quick service restaurant (a “QSR”). In order to expedite the through put of restaurant ordering and presentation, restaurant management companies are implementing digital ordering efficiencies, training and kitchen equipment necessary to satisfy consumers.

Changing the Human Interaction.

Many restaurants are discounting orders by 10% if you order on-line to increase efficiency and to reduce labor costs. Some consumers welcome the opportunity to receive a discount. Others crave the human interaction. For those that crave the human interaction, restaurants spend more time than ever in educating the order takers to maximize the human customer experience. The goal is to increase accuracy, reduce the waiting, avoid lines and maximize satisfaction. This enhanced order taking training is coupled with email and text offers personalized to the consumer. Through the use of loyalty programs, the data collected can tell how Kim likes his/her plant based burger with the fixings and side. Kim merely enters his/her telephone number, email or card provided, and the last order is available for reference. Some folks like this but the restaurant must make sure it is not too creepy.


Continue Reading Franchising Follows Consumer Preferences

Mediation is very effective in resolving disputes. Franchisors are enthusiastic about mediation, especially pre-suit, because it can eliminate the need to disclose settlements to prospective franchisees otherwise required under the FTC Rule. Regardless of whether the mediation involves a franchise dispute, or another negotiated dispute resolution, the focus is now on implementing settlement agreements which

On September 28, 2021, Fox Rothschild partner Craig Tractenberg with Rochelle Spandorf from Davis Wright Tremaine LLP provided perspectives on drafting licenses and distribution agreements respecting the evergreen issue of creating an accidental franchise in a Strafford Publications webinar. They also discussed best practices for complying with federal and state franchise and business opportunity laws

So yesterday I discussed some background related to anti-poaching and non-compete law. Today, I explain why the decision in Pittsburgh Logistics Systems provides a helpful analogue to franchising.

Facts

The case involves a no poach clause sought to be enforced by the current employer, Pittsburgh Logistic Systems (“Systems”), against four employees of Beemac Trucking, doing

Let’s review the status of activity restrictions in franchise agreements. Do they serve the purpose intended? Are they enforceable? Are they worth it? The Pennsylvania Supreme Court’s decision in Pittsburgh Logistics Systems v. Beemac Trucking, 2021 WL 1676399 (PA 4/29/2021) applies an analysis usually used to evaluate covenants not to compete, and concludes that

Charles Dicken’s A Tale  of Two Cities famously opens with “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the

Franchisor obtains $2,064,735.75 arbitration award against failed area developer.

In an arbitration decision handed down by the American Arbitration Association, Rita’s Franchise Company, LLC obtained an award against a Washington state area developer for $2,064,735.75, consisting of damages of $738,892.27 to date of hearing, counsel fees of $1,012,565.92, and reimbursement of costs. The award

The CARES Act has amended the Bankruptcy Code to provide an expedited and easier version of a business bankruptcy proceeding. We now have “Subchapter 5” for small business and individual debtors. This process fulfills a sweet spot for small franchisors and franchisees. It anticipates a Chapter 11 type result, without the administrative headaches and expense,

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Franchise systems, and many licensing arrangements, contain anti-poaching provisions. These provisions are being tested under the antitrust laws as being anticompetitive. This article will discuss the benefits and burdens of including such provisions in your agreements.

These “no-poach” or “anti-poaching” clauses are fairly standard provisions