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Monday
Jul172017

So You Say You Want a Revolution? Franchises Evolve as Retail Declines

Franchise Distribution Attorney Barry KurtzBar Certified Franchise & Distribution Law Specialist

by Barry Kurtz

818-907-3006

 

You’ve seen the news: retailers are struggling. Traditional anchor stores like Macy’s and Sears are closing up shop, creating a domino effect of fiscal death for shopping malls across the country. The Los Angeles Times reports over 8,000 retail stores may close before years’ end. 

Empty Food Courts Hurt Franchises

This is bad for Quick Serve Restaurants (QSRs) that have done a booming business in traditional mall food courts. But like all threatened species, there is a solution: Evolve. Though the traditional mall may be singing a swan song, other types of shopping complexes are doing good business.

Brick & Mortar Restaurant Locations

Not all malls are dead or dying, of course. And some properties will attempt a comeback through “experiential retail”, converting large anchor stores into movie theaters, restaurants, gyms, laser tag playgrounds or other facilities, which will hopefully lure back the smaller retailers as well as consumer foot traffic. But for franchisees leasing space in malls that are truly facing a decline, it may be time to revise a franchise agreement to accommodate a move to a more lucrative location. Consider alternative venues:

Outlet Malls: These still draw customers and generally have booming food courts filled with QSRs and other casual eateries. Many of them also lease space to family-friendly, full service restaurants as well.

Lifestyle Centers: Also known as boutique malls, these are mixed use commercial properties and popular draws for more upscale consumer spending. CityPlace in West Palm Beach or The Grove here in Los Angeles are prime examples. Single location restaurants and chains that are a little higher end tend to set out shingles in these locations. But QSRs may have opportunities in the surrounding areas.

Marketplaces: These settings are also on the rise in the U.S. Check out Grand Central Market in Los Angeles, or a venue like Underground Atlanta in Georgia.

Franchisees, consult with your franchisor regarding pulling up the stakes.

Franchisors, don’t allow franchisees to relocate at will; however, if a franchisee can make a convincing showing that relocation will be in the best interests of both franchisee and franchisor, the franchisor’s consent may be forthcoming. Consider the economic realities – franchisees who turn good profits make for a healthier system.

Food Delivery Services Help FranchisesOther Options for QSRs

Hanging on at the traditional mall food court to the bitter end? That’s understandable in some cases, as moves can be very expensive in terms of cash, lost customer bases and good employees who simply can’t commute to a new store further down the road.

Though foot traffic may be declining, digital sales are up. Consider a mobile delivery service or curbside pickup (consult with the mall’s management for this option) to bolster the account books.

A Morgan Stanley report says $210 billion in restaurant food is consumed outside of the restaurant from which it is ordered each year – though currently, only about five percent of that spend accounts for deliveries of online orders. But a writer for The Motley Fool projects a 15 percent growth in digital deliveries annually.

Whatever a QSR or other franchises decide to do – there are still plenty of options for business growth. You just have to embrace the change.

Barry Kurtz is the Chair of our Franchise & Distribution Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Friday
Jul142017

Environmental Law: H.R. 2936 a Solution to Fire-borrowing?

Environmental Litigation AttorneyEnvironmental Litigation

Stephen T. Holzer

818.907.3299

 

The federal House Natural Resources Committee (HNRC) recently passed H.R. 2936, a bill to improve the overall health of forests and other lands across the country.

The bill was introduced by Bruce Westerman (R-AK), who is Chair of the Oversight and Investigations Subcommittee of HNRC. (Before taking his Congressional seat, Westerman earned a degree in biological and agricultural engineering, and subsequently served as engineer and forester for an engineering consulting firm. See https://westerman.house.gov/about.)

The Resilient Federal Forests Act, or H.R. 2936, may reduce the risk of wildfire. According to Rob Bishop (R-UT):

Our forest health crisis can no longer be neglected. Active management is needed to reduce the risk of catastrophic wildfire and improve the health and resiliency of our forests and grasslands. More money alone is not the solution. This comprehensive forest management package solves the fire-borrowing problem and gives federal land managers immediate tools to increase the pace and scale of management and restoration projects.

“Fire-borrowing” is the practice of taking funds earmarked for fire prevention, to supplement firefighting instead. The Western Governors’ Association (WGA) addressed the problem in a letter to key congressional leaders late last year:

…the current funding situation has allowed severe wildfires to burn through crippling amounts of the very funds that should instead be used to prevent and reduce wildfire impacts, costs, and safety risks to firefighters and the public.

California Drought Hampers FirefightingThe Association cites an increase in firefighting costs by the U.S. Forest Service (USFS) from 13 percent in 1991, to nearly 50 percent in recent years. That’s quite a chunk of change, especially given the present administration’s intention to cut the forestry budget by $1 billion. On the other hand, some would argue that individual states should pick up any extra expense of fire fighting in their own jurisdictions, inasmuch as such fighting has as its purpose the protection of local ecology and people.

The editorial board of the Fresno Bee, in support of another House bill, the Wildfire Disaster Funding Act, says fire-borrowing is expected to devour up to 70 percent of the USFS’s budget in less than a decade.  Those who believe the planet will get progressively warmer also believe we will see more and more wildfires over the years, triggering even more emergency extinguishing efforts rather than prevention.

Insect infestation and botanical diseases combined with drought (especially here in California) have yielded a lot of dead wood. This over-abundant fuel situation combined with the severe depletion of USFS fire prevention budgets by emergency firefighting efforts creates – dare we say it – a perfect firestorm.

Westerman and other H.R. 2936 supporters hope to reverse the destructive cycle.

Details of the Resilient Federal Forests Act

If passed by both houses of Congress and signed into law, H.R. 2936 may expedite:     

  • Environmental analysis
  • Forest management activities
  • Stewardship and end result contracting
  • Secure rural schools and communities
  • Provide additional funding sources for forest management
  • Protect and manage tribal forests 

Additionally, H.R. 2963 would define categorical exclusions to expedite: 

  • Critical response actions
  • Salvage operations for catastrophic events
  • Plans for successional forestry
  • Plans for roadside projects
  • Reduced risk of wildfire
  • Improve or restore National Forest System Lands 

Part of the bill also addresses litigation, and prohibits fee awards given to plaintiffs and their attorneys, thus reducing the potential for “bounty hunter” litigation.

Where’s the Conflagration?

Westerman’s forest resiliency bill is running into some controversy, primarily from environmentalists who wish to limit logging activities, protect endangered species and preserve the rights of citizens to sue should unforeseen circumstances arise. They claim the bill is riddled with loopholes.

Federal Bill Reduces Forest Fire Fuel

Detailed arguments against passing the Resilient Federal Forest Act are outlined in a press release regarding the “Logging Bill” as it is called by the Western Environmental Law Center: 

  • Unsustainable logging permitted, characterized as a timber industry “wish list”.
  • Landowners with easements over public land will be given ownership.
  • Logging and salvage logging projects, herbicide application, and construction projects encompassing less than 10K acres may dodge environmental surveys and analysis.
  • Endangered Species Act may be subverted.
  • Public oversight severely limited.
  • Funds allocated to land stewardship diverted to USFS to plan timber sales.
  • Attorneys’ fees cannot be awarded if government breaks the law.
  • Forest plans no longer enforceable.
  • Diverts authority to determine impact on endangered species to land management agencies. 

So what’s the best way to save our national forests? 

The aforementioned Wildfire Disaster Funding Act increases the budget for firefighting. That in itself can be a controversial method among certain factions. But adding more federal funding does not come burdened with the same hot-topic environmental concerns of the Westerman bill.

There is yet another issue—whether increased fire-fighting funding is sought at the federal or state level, the perennial question arises as to who is going to pay, and how? The federal government is $20 trillion in debt; and states like California have pension programs that are also deeply in debt and threaten the states’ financial viability.

Are those advocating more fire-fighting funding willing either to pay yet more in taxes or to reduce other government expenditures to prevent the debt from spiraling out of control? There is simply not enough money to do everything we want government to do, all at once.

It’s said that Nero watched Rome burn – and some contend he even started the fire to clear room to build a palace. The question is, should we allow Rome to burn, or control the clearing with H.R. 2936? That remains to be seen.

Stephen T. Holzer is a Business Litigation Attorney and the Chair of our Environmental Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Jul122017

Does This Selfie Make Me Look Like a Copyright Infringer?

 

Trademark and Franchise Attorney Tal GrinblatIntellectual Property Lawyer

 by Tal Grinblat

(818) 907-3284

 

 

Caution. This blog lacks lawyerly gravitas. Why?

Naruto SelfieWikimedia Commons Public Domain: Naruto's Selfie

The Ninth Circuit Court of Appeals will consider a copyright infringement suit brought by a primate – specifically, Naruto, an Indonesian crested macaque that supposedly made fantastic use of his opposable thumbs and took a selfie in 2011 – long before primate selfies became a "thing".

Naruto used a camera owned by David Slater, a wildlife photographer. Apparently, the macaque is well versed in camera use, having observed numerous tourists visiting his reserve in Indonesia.

Slater had been selling Naruto's photogenic image since the primate's fateful selfie-indulgence day. But under U.S. copyright law, the person who takes the photo is the copyright owner for the resulting image. So is Naruto entitled to copyright protection for his image?

'Next Friends' Got Naruto's Back

A "next friend" in legal terminology, is a person who represents someone who is disabled or otherwise unable to bring a lawsuit on his or her own behalf.

Enter, stage left, the People for Ethical Treatment of Animals (PETA), along with primatologist Antje Engelhardt who sued Slater in 2015 on behalf of Naruto for copyright infringement, even though the U.S. Copyright Office determined in 2014 that non-human authors cannot hold copyrights (see sections 306 and 313.2.).  

Last year a district court judge found for Slater and dismissed PETA’s case, holding as follows: 

Naruto is not an "author" within the meaning of the Copyright Act. Next Friends argue that this result is "antithetical" to the "tremendous [public] interest in animal art." . . . Perhaps. But that is an argument that should be made to Congress and the President, not to me. The issue for me is whether Next Friends have demonstrated that the Copyright Act confers standing upon Naruto. In light of the plain language of the Copyright Act, past judicial interpretations of the Act's authorship requirement, and guidance from the Copyright Office, they have not.

PETA and Engelhardt disagree. In the "Next Friends" appellate brief, they argue that nothing in the Copyright Act limits the law's application to humans, and that it is antithetical to the purpose of the Act to specify who can be an author; and that protections under the Act depend on the originality of the work, not the author's humanity.

How will the 9th Circuit decide? That remains to be seen. Perhaps we can get Naruto to draw us a picture.

 

Tal Grinblat is an Intellectual Property Attorney and a Certified Franchise & Distribution Law Specialist.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jul102017

Trimming the Fat: Restaurant Menu Labeling Rule Under Further Review

Franchise LawyerChair, Franchise & Distribution Practice Group

 

by Barry Kurtz

818-907-3006

 

In 2010 as part of the Patient Protection and Affordable Care Act a/k/a “Obamacare”, the federal government set provisions mandating restaurant chains provide nutrition information for menu items. The U.S. Food and Drug Administration (FDA or Agency) was supposed to come up with guidelines for compliance.

FDA Menu Rules for Coupons

The Agency did so, issuing its final rule in December 2014. Certain parties requested extended compliance deadlines in July 2015, the FDA announced the following December that concerned restaurants should meet requirements by December 1, 2016; however, on December 30, 2016 the Agency decreed menu labeling enforcement was to begin May 5, 2017.

Or not. In May, the FDA extended the menu labeling compliance deadline once again, pushing everything back to May 7, 2018 to give the Agency time to “consider how we might further reduce the regulatory burden”. Interested franchisors have until August 2, 2017 to weigh in on the interim final rule.

Current Menu Label Requirements

As the FDA Interim Final Rule for restaurants stands now (see: 2016 Labeling Guide for Restaurants), succinctly covered in a mere 58 pages, menu labeling will be required of all covered establishments – restaurants and similar retail food sellers with 20 or more locations doing business under the same name and selling substantially similar menu items. 

Covered establishments may include bakeries, coffee shops, convenience stores and concession stands that meet the above criteria. Eateries that are not considered covered establishments generally don’t meet the 20 location rule. But there are also exemptions for hospitals, schools, transportation carriers (food services on planes and trains), food trucks and sidewalk carts.

Restaurant nutrition labeling will be required on standard menu items, combination meals, variable menu items, side dishes and beverages. Foods that will not require labeling under the current rule include alcoholic beverages (unless they appear on a menu or menu board), condiments, daily specials, temporary market items, custom orders and market-test menu items.

In house and takeout menus and menu boards should include: 

  • Number of calories for each menu item for sale, adjacent to the item or the item’s price, and listed as “cal” or “calories”.

  • Statement similar to: “2,000 calories a day is used for general nutrition advice, but calorie needs vary.”

  • Statement similar to: “Additional nutrition information available on request.” 

More Food for Thought (and Rule Commenting)

FDA Nutrition LabelingMany of the provisions in the menu labeling rule have to do with remote points of sale and consumer impulse choices. Generally, these situations occur on premises.

But offsite, the general thinking is this: if a consumer sees restaurant marketing that lists menu items and provides info like a phone number or web link for the consumer to order immediately, nutrition information should be provided for that menu item. For example: 

  • If a pizza chain offers a discount or BOGO (Buy One Get One) offer attached to a takeout menu that already provides nutrition labeling, no further information for that discounted food item is needed on the coupon. On the other hand, if the offer is a “stand alone” coupon, e.g. paper flier without nutrition info affixed to a pizza delivery box, that coupon could be in violation of the menu labeling rule as currently written.

  • Topping options, e.g. mushrooms for pizza, chocolate sprinkles for ice cream, etc. should also have calories listed.

  • Restaurants that offer appetizer or catering platters, should consider listing calories for the entire platter, or per discrete serving unit: “appetizer sampler: 80 cal/buffalo wing, 5 wings”.  

If you plan to weigh in on these or other aspects of the Agency’s proposed plans for nutrition labeling, follow these FDA commenting instructions for written and electronic submissions. Again, input should be properly delivered to the Agency before August 2, 2017.

Barry Kurtz is a Certified Franchise & Distribution Law Specialist in California.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jul062017

Tomato Tweaking: Genetically Engineered Crops May Be Safe for Consumption, Environment

Litigation AttorneyEnvironmental Litigation

Stephen T. Holzer

818.907.3299

 

Most of us remember the Jack and the Beanstalk story. In this 18th century fairy tale, a young, poor, every-day Jack trades an old cow for magic beans which makes his mother very angry. But in the end, Jack manages to bring home untold riches, ending all of their worries – barring a potential blood feud with a murdered giant’s wife – all because of these special beans. (Never mind that Jack was technically a housebreaker. That’s another area of law entirely.)

Worker weeding farm fieldGenetically-engineered crops (or GECs) may very well be like Jack’s magic beans, based on the fear and anger they seem to sprout among environmentalists and the health conscious.

But before we get into that, let’s narrow the field of villains by first defining GECs, which should be distinguished from genetically modified organisms, or GMOs.

Some experts contend that GECs are actually a type of GMO. Genetic modification has been going on since the dawn of agriculture – almost all of our food has been modified over the centuries. Such modifications allow for corn digestible by human stomachs, or the thousands of known varieties of tomatoes cropping up globally.

Engineered agriculture on the other hand, was first developed in the 1990s and has a specific goal of adding new traits to an organism. These traits might include making a papaya virus-resistant, or rice harvests more nutrient-rich. If we believed in castles in the sky, scientists might engineer a beanstalk to get there, making it grow taller and sturdier.

So how safe are GECs?

Try the Beans. They’re Not Bad.

Researchers published a report last year that may allay some of the aforementioned fear-based anger.

The study released in May, was conducted by members of the Board of Agriculture and Natural Resources, the Division on Earth and Life Studies, and the National Academies of Sciences, Engineering and Medicine. (Click this link to read: Genetically Engineered Crops: Experiences and Prospects.) The authors drew conclusions based on “the National Academies consensus-study-process”: relying on field studies conducted since the 1990s, input from over 700 experts and organizations, and both peer-reviewed and non-peer-reviewed literature.

They contend that scientists have been developing GECs “to express novel traits” since the 1980s, though they weren’t available for commercial use until the 1990s. But at the conclusion of their data gathering in 2015, only two varieties of GECs were in wide-spread use: those that have been engineered for insect resistance, and those engineered for herbicide resistance. 

Based on their research, the authors concluded that these engineered plants are safe for both human and livestock use and consumption:

. . . long-term data on livestock health before and after the introduction of GE crops showed no adverse effects associated with GE crops. The committee also examined epidemiological data on incidence of cancers and other human-health problems over time and found no substantiated evidence that foods from GE crops were less safe than foods from non-GE crops.

GEC Agronomy and the Environment

Further, the research committee also indicated there is no conclusive proof that GECs have negative effects on the environment – though the authors do amend that conclusion with a warning that measuring long term environmental effects is a complicated process.

There have been strong claims made about the purported benefits and adverse effects of GE crops. The committee found little evidence to connect GE crops and their associated technologies with adverse agronomic or environmental problems. 

The research cites mixed evidence regarding increased or decreased crop yields and biodiversity. For example, “The quantitative contribution of GE crop traits themselves to yield in experimental plots was sometimes difficult to determine because the GE and non-GE varieties could differ in other yield-associated traits.”

Agri-industry Commercial farm field

Additionally, further studies need to be conducted to account for differences in soil characteristics, irrigation and tilling frequency, and a host of other factors like the use of glyphosates or a farmer’s financial resources. Over a decade of research was available to the authors – but they conclude more targeted testing is needed.

Lettuce Legislate GM Labeling

It seems GECs may not be as bad as some environmentalists believe. So why then, have six counties in California, most recently Sonoma County in the November election, banned genetically engineered agriculture? Our state has the largest GEC-free growing zone in the country.

It seems that despite the National Academies of Science study, the giants of environmental concern are still feeling threatened by GM agronomy.

Last July, President Barack Obama signed a law that modifies the Agricultural Marketing Act of 1946 – it directs the Secretary of Agriculture to devise a system for labeling food that had its DNA modified by scientists (as opposed through conventional breeding or by nature).

The US Department of Agriculture had two years as of the enactment of the law to establish the rules, and the Department recently posted 30 questions for interested parties to answer to facilitate in drafting those GMO labeling rules. The USDA says there will be an additional period for comments once the Department compiles input acquired via the questions and proposes a labeling rule.

 

Stephen T. Holzer is the Chair of our Environmental Practice Group and a business litigation attorney. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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