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Entries in federal law (12)

Thursday
Nov162017

Restaurant Industry Gets Another Chance to Chime in on Menu Labeling

CalBar Certified Franchise & Distribution Law Specialist

by Barry Kurtz

818-907-3006

 

Franchisors in the food service industry have until January 18, 2018 to comment on the latest version of the Food & Drug Administration’s Menu Labeling Guidance. The FDA released the draft November 7th. This version includes pictorial suggestions for how consumer information might be displayed under certain circumstances.

The currently non-binding recommendations aim to clarify options for menu labeling compliance and will eventually affect any food and beverage retailer, including those selling self-service foods and buffet operators.

 

Special Orders: The ABCs of Menu Labeling

 

Caloric information is the key ingredient in menu labeling requirements. But the FDA is now taking a more cooperative approach to handling special situations:

All You Can Eat: In the current draft, signage regarding serving size and calories are not required next to every food item offered on a buffet. However, the info must be available to consumers in other forms, i.e. gel window-clings on sneeze guards or on menu boards.

Speaking of menu boards, restaurant owners need not provide one at their businesses if they do not already display a menu.

On the other hand, if a menu board is available on site, it must be updated to include nutrition information. Digital kiosks or other devices, hand-held menus, etc., may also be used to convey consumer info about nutrition.

By the Bucket or Bowl: Family style restaurants like Maggiano’s will be required to provide caloric info for the whole (multiple serving) menu item sold. However, family-style restaurants may relay additional information, such as the suggested number of individual servings and calories per serving of that item. The FDA offers this example:

Family-Style Salad: 1,200 Cal: 150 Cal/serving, 8 servings

Beer, Wine, Cocktails: If the choices are listed on a menu or menu board, nutrition should also be displayed. “Display” foods are not subject to the labeling requirements. These include beers served on tap.

Seasonal beers (pumpkin spiced ale, anyone?) on the menu are also exempt from labeling requirements provided they are not available for more than 60 days per year.

Customer Crafted Menu Items: The FDA now offers “build-your-own” restaurants like Chipotle or PizzaRev a bit of flexibility. The Administration suggests this type of restaurant group customer options, i.e. pizza crusts, sauce choices and toppings so that consumers can quickly calculate which options provide the most and least amount of calories per slice or serving. 

Chef’s Choice: Food selections based on seasonal produce or other items that change on a daily basis are not subject to the nutrition labeling guidance, UNLESS, these selections appear regularly. So a restaurant that serves clam chowder every third Friday will have to provide nutrition information.

Self Service Foods: Food and beverages in soda machines; grab and go donut cases, sandwich or salad coolers; rotisserie chicken warming carts and similar displays and dispensers all fall under the self-service or food-on-display categories.

Pre-packaged foods like sandwiches prepared on site but already wrapped for customer convenience should display an FOP, or “front of pack” label with calorie information.

Donut cases and beverage dispensers found in grocery or convenience stores contain unpackaged foods. A label can be affixed to the dispenser or display case detailing information for each choice available, or displayed on signage nearby.

 

To Lab Test, or Not To Lab Test?

 

 

The FDA will not require restaurants to submit menu items to food labs to determine nutrition information. But legitimate options for determining calorie and other data are required. The Administration recommends using one of the following:

  • Laboratory Analysis
  • USDA National Nutrient Database
  • Trade Association or Industry Databases
  • Alcohol and Tobacco Tax and Trade Bureau Methods for Analysis
  • Cookbook Listings
  • Other reasonable means

If opting for other reasonable means, records must be maintained at corporate headquarters or the restaurant’s main office in case the FDA requests the data and method used to substantiate the information.

 

Chain Stores and Co-Ops

 

Independent franchises, cooperatives, grocery chains and similar businesses not selling substantially similar foods from location to location are not considered “covered establishments” as far as the FDA Menu Labeling Guidance is concerned. “Covered Establishments” include businesses that:

  • Have 20 or more locations
  • Do business under the same name
  • Sell substantially same menu items
  • Sell food eaten on premises or food that may be taken away

So a gasoline franchisee of a major chain that also operates an independently owned mini-mart under a different name would not be considered a “covered establishment”.

 

The Wrap Up

 

Again, the Administration decided to take a more flexible approach in their rules regarding nutrition labeling, and work more cooperatively with covered establishments:

. . . our typical approach following an inspection would be to raise any compliance concerns with the most responsible person (e.g., the manager or owner) at a covered establishment during a close-out inspection meeting or in regulatory meetings with that establishment. If post-inspection issues remain, we may send a letter to the establishment asking for the firm to come into compliance. Any enforcement activities we pursue will be consistent with our public health priorities. . .

All in all, this seems like a much more feasible plan than the 2014 Final Rule previously published.

Barry Kurtz is the Chair of Lewitt Hackman's 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.

Monday
Aug282017

Gas Station Dealers: A Review of the Petroleum Marketing Practices Act

Franchise Litigation Attorney David GurnickCertified Franchise & Distribution Law Specialist

by David Gurnick

818.907.3285

So far in 2017 no federal or state court in California issued a published decision under the Petroleum Marketing Practices Act (“PMPA”) – despite the fact gasoline demand and consumption continue to rise. The reason for fewer cases may be the ongoing decline in number of gas stations and dealers. For dealers who operate as franchisees, it is useful to be aware of the PMPA.

The PMPA was passed nearly 40 years ago, in 1978. Congress sought to protect gas station franchisees from being unfairly terminated or not renewed by their oil company franchisors.

Its basic rule is that a franchisor cannot terminate a dealer or refuse to renew a dealer’s franchise at the end of the term. The law then states exceptions. For a franchisor to lawfully terminate or not renew a franchisee, it must fit the circumstances into one of the law’s exceptions.

A franchisor may terminate or not renew a franchisee dealer in the following circumstances: 

  • If the franchise dealer does not perform the franchise agreement, or try in good faith to carry out its terms. 

  • If the franchisor withdraws from the market area where the dealer is located. 

  • The franchisee fails to pay the franchisor on time. 

  • The franchisee fails to operate for 7 days. 

  • The franchisee commits fraud, criminal conduct or files for bankruptcy. 

  • The franchisee becomes severely disabled, physical or mental. 

  • The franchisor loses its lease for the location. 

Nonrenewal by the franchisor is allowed if: 

  • The franchisee did not operate in a clean, safe and healthful manner. 

  • The franchisee did not correct problems identified in customer complaints. 

  • The parties cannot agree on renewal terms. 

  • The franchisor decides to convert the location to a different use or to sell or replace the location. 

  • The franchisor decides the location is not economical. 

The above circumstances for termination or nonrenewal are summaries. The actual statutory grounds include additional restrictions and conditions on the franchisor.

For example, some of the grounds apply only if the franchisor’s decision was made close in time to when the situation occurred. Franchisor decisions must be made in good faith. In some cases, the franchisor is required to offer to sell the premises to the franchisee.

A franchisor seeking to terminate or not renew a dealer must provide written notice under the rules of PMPA.

For example, if the franchisor’s action is due to breach or misconduct by the franchisee, the franchisee must be allowed an opportunity to correct the breach. A franchisor must provide notice at least 90 days before the termination or nonrenewal date. The notice must meet requirements as to form. It must state the date of termination or nonrenewal and provide a summary statement specified by the PMPA.

For a dealer whose rights are being violated, the PMPA allows an action in federal court. The PMPA provides a relaxed standard for the court to grant an injunction against wrongful termination or nonrenewal. The PMPA directs the court to grant a preliminary injunction if the franchisee shows: the franchise is being terminated or not renewed; there are serious questions to be litigated; and the hardship to the franchisor from an injunction is less than the hardship to the franchisee if no injunction is granted.

A dealer who wins PMPA litigation can recover damages, punitive damages, expert fees and attorney fees. In one case, $2.5 million of damages was awarded against a franchisor (Sun Oil) that stopped selling product to its dealer on credit and told the dealer to stop using its trademark.  

A jury agreed that the franchisor had not followed the PMPA’s requirement to give an advance notice of termination. A franchisee whose claim is frivolous could be ordered to pay the franchisor’s attorney and expert fees.

David Gurnick is a business litigation attorney and a Certified Specialist in Franchise & Distribution Law.

 

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
Jun082017

There's an App for That: Franchisors Fight Slumping Sales, Millenials

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

How has the gourmet burger gone awry? According to Fox, the better burger business dropped five percent in foot traffic at quick-serve restaurants last year, primarily because consumers are opting to “DIY” their food at home.

But why would customers go through the hassle of firing up the grill when it’s so much easier to belly-up to a counter and place an order? For many, double-digit burgers just cost too much.

Franchisors are taking notice, and making adjustments.

Some are offering premium toppings to compete with the fancier restaurant chains. Others like McDonald’s plan to try using non-frozen beef or offer more “Signature Crafted” items alongside the menu mainstays. Franchises like Wendy’s are sticking to lower price point items, knowing the average consumer just can’t spend $6.00 per day on lunch, according to the article.

Chains in fast food (Burger King), quick-serve (Habit) and full service, sit-down style restaurants (Red Robin) are offering rewards programs to encourage brand loyalty through discounts and freebies. These strategies may help bring back those customers wanting to save money.

But there’s another reason diners are cutting back on eating out: Physically going to restaurants just costs too much in time and stress. Some even characterize it as a “dying tradition” that eats up too much of the work day. Just consider the coordination of schedules, the drive to the restaurant, a hunt for parking, the wait for a table, the wait for service…all of that time adds up. It’s daunting.

And some blame the millennials, who, believe it or not, prefer to cook at home more than their parents did. They also rely more on fast, cheaper meals provided by grocery stores, grocery delivery services, and a new wave of hi-tech, time-saving web based applications for curbside pickup or delivery.

Speed seems to be key here. Denny’s just launched Denny’s on Demand, allowing customers to place orders for pickup or delivery, and pay for those orders. Forget 30 minute pizza delivery. In the land "Down Under", Dominos is working on making and delivering pizzas in 10 minutes or less.

Jack in the Box recently teamed up with DoorDash to deliver curly fries and tacos to home addresses. McDonald’s hopes to drive up profits through UberEats, now available in 100 test markets across the country. Eat24 and Yelp will help web visitors find fast food delivery services within their zip codes.

All in all, apps seem to be the way of the future for restaurants craving more business. Some eateries in the Los Angeles area are claiming anywhere from a 2 to 35 percent increases in sales due to expanded digital assets. But what should franchisors know about the legal ramifications of going hi-tech?

A Franchisor’s Mobilization Plan

Some recent litigation in the dawn of digital gastronomy points the way. Franchisors should ensure they hire the right developers to reduce the risk of litigation. Important aspects to consider include:

Accessibility: This is a big issue, as ADA (Americans with Disabilities Act) suits are on the rise. Sweetgreen, Inc., a Washington D.C. based salad chain faced a class action lawsuit filed on behalf of visually-impaired plaintiffs. The app Sweetgreen had developed to allow customers to order online for faster pickup worked great for those who could see. But those customers who were impaired or blind weren’t able to customize their orders as easily, and spent extra time refining their choices at the restaurant. For this group, the app wasn’t time-saving at all.

Intellectual Property Rights: It’s common for developers to borrow code already written, rather than reinvent the wheel every time they build a new site or app. The same applies to graphics and text. However, developers are being targeted more and more often for trademark, copyright or patent infringement. Franchisors should ensure the developers own all elements used in the project, have the licensed rights to use all elements, or that the developers assume all responsibility should IP litigation be initiated.

Privacy: This one’s always an issue, as anything that connects to the internet can be hacked. Just ask Starbucks, which attributes a third of its sales to purchases made through its app. The franchise also claims that less than one percent of its app users have actually been hacked, and that the fault lies with users employing simplistic passwords. Whether those claims are true or not, the hacking is turning out to be a bit of a social media challenge for the coffee franchise.

Third Party Partnerships: Customers are generally unaware when they place an order online through their favorite restaurant’s website that the food will actually be delivered through a third party delivery service. Zoomer is one example, and plaintiffs allege the company violated the federal Telephone Consumer Protection Act and other laws when the delivery service sent customers unauthorized texts after placing food orders with partner restaurants. Granted, it’s the delivery service that is facing the lawsuit – but franchisors should be wary of using any third party service that will annoy customers. Or break the law.

As for the non-digital logistics, remember the practicalities: People who order online generally don’t want to communicate with the restaurant – they want to get in and out quickly, or just have food delivered without fuss. Consider more short-term parking or curb service for pickups; counter space, windows or staff dedicated just to online orders; and whether or not it’s better to employ your own delivery staff or contract out.

Most importantly, make sure the app works, and that it works well – there’s no point in developing an app that doesn’t allow customers to order, customize selections, and pay. Useless apps without these features tend to get slammed in reviews. And the critics are harsh, as seen in the example to the right.

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

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
Jan252017

“Way Mo” Autonomous Cars Coming Fast

Personal InjuryPersonal Injury Attorney

 

 

by Andrew L. Shapiro

(818) 907-3230

 

It’s a race to beat all races:  several car makers, including Ford, General Motors, Volvo, BMW and Tesla are promising fully autonomous vehicles within the next five years. Not far behind the pack, Google recently renamed its own autonomous contender the “Waymo”, according to Bloomberg Tech. And Nissan is big in Japan with plans to have commercial, driverless vehicles up and running on its home turf by 2020.

Recently, the U.S. Department of Transportation (DOT) announced that 10 sites across the nation were chosen for the testing of artificially intelligent (AI) vehicles. Two of these are right here in California – at the Contra Costa Transportation Authority in Walnut Creek, and the San Diego Association of Governments.

So what does all of this mean for driver safety?

It’s still too early to tell. For now, the general public can rest assured that the DOT’s designated test sites are meant to be just that – test sites. Automakers running cars at these locations are expected to share test results and tech knowledge per a Federal Automated Vehicles Policy released in September.

Transportation Secretary Anthony Foxx explained:

This group will openly share best practices for the safe conduct of testing and operations as they are developed, enabling the participants and the general public to learn at a faster rate and accelerating the pace of safe deployment. 

Autonomous Vehicle Safety

Last May a driver was killed in Florida when his autonomously driven Tesla crashed into a truck. The National Highway Traffic Safety Administration though, recently concluded that Tesla was not at fault. NHTSA said driver-assist software for the vehicle performed “as designed”, and that drivers should still pay attention when behind the wheels of AI vehicles.

The feds investigated other AI crashes and found that many of these were because of “driver behavior factors”.

Overall, even the insurance industry is gearing up for safer highways and streets. Once autonomous vehicles really get rolling, the industry expects a decline in driver insurance premiums, though it also expects an increase in product liability revenue. The reason?

Drivers involved in crashes will sue each other less and less, and will instead turn to car makers to satisfy injury claims.

 

Andrew L. Shapiro is the Chair of our Personal Injury 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
Nov232016

Employers: Texas District Court Grants Nationwide Injunction Against DOL's Final Rule

Lawyer for EmployersEmployment Defense

by Tal Burnovski Yeyni

818-907-3224

 

In May we reported the Federal Department of Labor issued its Final Rule regarding the minimum salary level required for the exemption of executive, administrative and professional (EAP) employees.  The final rule was designed to raise the minimum salary required for the exemption from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). 

In an 11th hour ruling,  U.S. District Court Judge Amos L. Mazzant granted a motion for preliminary injunction filed by 21 States that challenged the Minimum Salary Rule and imposed a nationwide injunction against the implementation of the Final Rule that was scheduled to take effect on December 1, 2016.  

In a 20-page decision Judge Mazzant opined the DOL lacked authority to define and delimit a minimum salary threshold for exemption. Per Judge Mazzant, Congress intended for the EAP exemption in the Fair Labor Standards Act (FLSA) to depend on employee’s duties rather than on the employee’s salary.  Accordingly, the DOL’s authority was limited to define and establish the types of duties that might qualify an employee for the exemption:

While this explicit delegation would give the [DOL] significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level. 

Further, Judge Mazzant held that with the Final Rule, the DOL exceeded its delegated authority and ignored Congress’s intent by raising the minimum salary level “such that it supplants the duties test” and creates a “de facto salary-only test”.

Following the Court’s analysis regarding the DOL’s authority to promulgate the Final Rule and the likelihood of the irreparable harm and balance of hardship between the parties’ the Court decided that a nationwide injunction was proper in this case.

Implications for California Employers

As the Final Rule is currently on hold, California employers are required to comply with the California threshold for EAP exemption, which is at least two times the state’s minimum wage for full time employment (currently, $3,466.67 monthly; $41,600 annually).  Note that with the gradual raise in the State’s minimum wage starting on January 1, 2017, the minimum threshold for exemption will go up as well.

Finally, employers should be advised that the salary threshold test is merely one component of a valid exempt status. To be properly classified as an exempt employee an employee must: 

  • Primarily engage in “exempt duties” and;
  • Earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment.  

While some commentators speculate the DOL will appeal yesterday’s ruling, it still remains to be seen whether the feds will challenge Judge Mazzant’s decision. 

 

Tal Burnovski Yeyni is an attorney in our Employment 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.

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