Massachusetts Govenor Signs CORI Legislation in 2010

On May 7, 2012, the Massachusetts Department of Criminal Justice Information Services (“DCJIS”) launched a new on-line system (“iCORI”) for employers to use when conducting criminal background checks in Massachusetts.

Employers faced a May 4, 2012 deadline to comply with various provisions of Chapter 256 of the Acts of 2010, “An Act Reforming the Administrative Procedures Relative to Criminal Offender Record Information and Pre- and Post-Trial Supervised Release” (“CORI Reform”).  The May 4 deadline included the required use of the iCORI system and the adoption of policies and procedures for using criminal background information.  The iCORI system is now live and available through the DCJIS website. In addition, the DCJIS has published a model CORI policy, acknowledgement forms, and trainings for employers to review and consider in connection with CORI Reform compliance.

The DCJIS materials and access to iCORI may be obtained through the DCJIS’s website.

In addition to reviewing the materials on the DCJIS website, employers are advised to consult with their attorney to ensure that their use of criminal background checks complies with CORI Reform, the Fair Credit Reporting Act, and employment discrimination laws.

Stan Furash and Robert Zarco Testifying in front of the Massachusetts Joint Committee on Community Development and Small Business, June 29, 2011

Dunkin’ Donuts Franchise Owners Applauds Joint Committee’s Efforts for Fair Franchising Legislation.

Bellingham, MA— The DD Independent Franchise Owners Group (DDIFO), which represents the largest independent association of Dunkin’ Donuts franchise owners in the US, is applauding the Massachusetts Joint Committee on Community Development and Small Business and its co-Chairs, Senator Sal DiDomenico (D-Everett) and Representative Linda Dorcena Forry (D-Dorchester), for their efforts on behalf of franchise owners throughout the Commonwealth.

On May 4, the Committee announced it will convene a working group to review the issues and concerns surrounding franchise agreements in Massachusetts. For the last year, DDIFO has worked closely with members of the Committee to craft legislation that strengthens the rights of small business owners who enter into agreements with companies that sell franchises. At a June, 2011 hearing before the Committee, DDIFO President Jim Coen testified that even as franchising has flourished over the past 50 years, franchise agreements have become more one-sided – benefiting the franchisors over the franchisees.

“Franchising suffers when franchisors abuse the power granted them in their franchise agreements and wipe out the equity that’s been built and the personal money that’s been invested because they want to take your franchise and sell it to someone else—while the franchisors extracts more revenue for themselves,” said Coen.

According to a 2007 report by the International Franchising Association, Massachusetts franchises employ more than 149,000 workers directly, support another 323,000 jobs indirectly and generate more than $15.8 billion in revenue each year.

DDIFO looks forward to joining the Committee’s working group, and helping design legislation that will further enhance the relationship between franchisors and franchisees, thus enticing franchisees to invest and create more jobs in Massachusetts

Media Contact:

Contact:

Matt Ellis

Ellis Strategies, Inc.

matt@ellisstrategies.com

617-278-6560

The near party-line 235-173 vote moved the bill to the Senate, where Democrats controlling the chamber are sure to ignore it. But the measure’s inevitable demise was secondary to the chance it gave each side to offer its prescriptions for creating jobs, echoing the battle that seems certain to dominate this fall’s contest for the White House between President Barack Obama and Republican Mitt Romney.

“This is straight-up something to help small businesses keep more of their money while they’re having so much difficulty keeping the lights on, and instead giving them the ability to grow,” said House Majority Leader Eric Cantor, R-Va., the measure’s sponsor.

“This is not about mom and pop,” said Rep. Sander Levin, D-Mich. “It’s about popping the cork for wealthy taxpayers.”

Eighteen Democrats and 10 Republicans defected from their party’s positions on the bill.

Read more at Associated Press

Franchisees Holding Signs Supporting Legislation

DDIFO asked Restaurant Analyst John A. Gordon of Pacific Management Consulting Group to attend the California hearing in Sacramento and take some notes for DDIFO’s behalf.

Good news for franchisees from California!

On Tuesday, April 17^th, the California Judiciary Committee approved AB 2305, the California Franchising Level Playing Field for Small Business Act of 2012, via a 6 to 3 vote. It now passes to the California Assembly Business, Professions and Consumer Protections Committee for a hearing on April 24. After its approval, it will then later go to the full California Assembly and later, to the State Senate for approval, and on to Gov. Jerry Brown for his approval.

The vote was close and questions intense. Assembly members requested several modifications, and the bill’s sponsor, Assemblyman. Jared Huffman (D-San Rafael) indicated needed modifications can and will occur to make it even better.

As it turned out, the six yes votes were all from Democrats and the three no votes were from Republicans. Over 70 franchisees and allied partners testified for the bill. The California Chamber of Commerce and the franchisor law firm DLA Piper testified against it.

Pre hearing preparation:

Many of the proponents, including Asian American Hotel Owners Association (AAHOA), Coalition of Franchise Organizations (CFA), American Franchise Association (AFA), Seven -Eleven, McDonald’s and Wendy’s franchisees, and many others, gathered last Monday evening in West Sacramento for an organization session. The room was packed with almost 100 attendees. The franchisees were excited and energized. Virtually all noted some franchisor performance or contract related problem. The group was organized, with signs and posters pre-prepared.  I was present and represented DDIFO.

An exciting show: massive show of grassroots support on hearing day

On the morning of the hearing, 80 franchisees and other proponents gathered in the State Capitol hearing room. While the morning session grew long, AB 2305 came up for consideration just beforenoon. Assemblyman Jared Huffman introduced the bill indicating its great need. Attorney and lead drafter Peter Lagarias and CFA Chair Keith Miller then testified, followed by approximately 70 franchisees and other supporters. That was followed by testimony from opposing parties.

The opponents, led by the franchisor law firm DLA Piper, said they were unaware of problems, that there was not a surge of legislation, and that nothing had changed to require such legislative corrections. Among those testifying was a senior partner from DLA Piper’s franchising practice, representing the International Franchising Association (IFA), and the California Chamber of Commerce.  It was somewhat ironic to see DLA Piper on hand, as one of its founding partners was the lead in creating the complex and difficult contracts now in place.

Assemblymembers had comments and questions about why this legal factor or another was included in the bill. Assemblyman Mike Feuer, Chair of the Judiciary Committee, said the bill “needs more work.”  However, many saw an unlevel playing field in need of policy changes. Assemblyman Huffman recognized the need to make further improvements to the bill and committed to do so.

Why is this bill needed?

Huffman, Larigas and Miller summed up why the bill was needed during their testimony. In one of the most insightful comments, Larigas noted, “At the core of the franchise relationship is the contractual control exercised by the franchisor over every aspect of the franchisees business.”

“There is an imbalance today that adversely impacts people’s lives,” said Miller, who is also a Subway franchisee.

Other speakers highlighted that one sided franchise agreements have become prevalent over the last 40 years, resulting in contracts that are not on a level playing field; that franchisees make total, personal investments in their business, and are totally at risk; and that current California franchise investment law is a 40 years old and needs updating.

How did this effort come together: good organization

Even as efforts are underway to create fair franchising legislation in Rhode Island and Massachusetts, California franchisees have been working to improve the historically disadvantaged position that franchisees have suffered as a result of one-sided contracts. A group of interested parties began working on draft legislation several months ago. Assemblyman Huffman, who had long term interest in this topic, took the lead in sponsoring the action. He introduced it in Sacramento two months ago.

Immediately after, AAHOA, CFA, AFA, California Small Business Association, AAFD, and other associations initiated a letter writing campaign.

What’s next?

AB 2305 faces a vote in the Assembly Business and Professional Committee on April 24.

“I’m hoping for a good outcome in the next committee. [But] each one of these committees is an opportunity for the industry to line up opponents and kill the bill. It’s going to be one battle after another,” said Huffman.

John A. Gordon is Principal of Pacific Management Consulting Group. His article was written at the request of the DD independent Franchise Owners.

This issue was published in April 2012.

We are able to bring this to you via the web in a format that closely resembles the look and feel of a magazine.

DDIFO Sponsor Direct Capital, a national direct franchise lender, has been selected to offer Dunkin’ Donuts franchise owners a competitive “express” finance program for Radiant POS and MAC Peripheral purchases. The Radiant 100 Program provides not only 6.9% financing with low fixed monthly payments, but also features a bonus incentive rebate. By financing your Radiant POS and MAC Peripheral purchases with Direct Capital, you are automatically eligible for a $2,000 rebate when you finance your new store or remodel project with the lender in 2012.

What’s more, Direct Capital’s Radiant 100 Program streamlines the process from top to bottom. At http://dd.lendedge.com, you can quickly and easily create an account and proceed immediately to complete the one-page online application. Within four to six hours of submitting your application, you will receive an email notification with the approval terms and a link to express electronic documentation that allows you to initiate your order. There is no money down, and no financials are required for approvals up to $150,000. (If you prefer, you can apply online by contacting Tim Amero at 603-373-1978.)

Your Radiant 100 Program application creates a master finance agreement with Direct Capital that allows you to apply for additional funding over time with just a one-page addendum to the existing finance contract.

For more information, contact Robyn Gault at 603-433-9476 or rgault@directcapital.com.

Market research shows that a large percentage of commercial mortgages outstanding are set to mature within the next few years, particularly those held by community banks.  As real estate values have declined, however, even small businesses that are performing well and making their payments on time can have a hard time refinancing these loans and may need to restructure their debt.  Also, public comments and the Small Business Jobs Act tour identified that access to working capital is currently the biggest credit gap in the marketplace.  This is even true for businesses with equity in their properties.

Under the Small Business Jobs Act, the SBA has implemented a temporary program—authorized until September 27, 2012—allowing small businesses to refinance eligible fixed assets in its 504 program without requirement of an expansion. This program provides small businesses the opportunity to lock in long-term, stable financing, and finance eligible business expenses as well as protect jobs and hire additional workers.  Key program changes were made in April 2011 and with the issuance of a final rule, effective October 12, 2011.

Typically, a 504 project includes three elements:

a loan (or first mortgage) secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a second mortgage secured with a junior lien from an SBA Certified Development Company (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business borrower.

GSDC is a SBA Certified Development Company and is New England’s largest participant in the Small Business Administration (SBA) 504 loan program and #4 Nationally. 

Barbara is responsible for developing business primarily in Massachusetts but is also authorized to work on projects in Maine, New Hampshire and Vermont.  She brings 25 years of SBA lending experience, including a variety of other credit enhancement loan programs.  She has extensive experience in structuring financing, particularly for complex transactions.  Prior to joining GSDC she was with CIT Small Business Lending for 16 years and led a team of 12 sales people throughout the Northeast and managed franchise relationships including Dunkin Brands.

Barbara is involved in many organizations including: National Association of Government Guaranteed Lenders (NAGGL), serving as the Regional Chairperson for the past 3 years; New England Franchise Association (NEFA), Past Board Member and Treasurer;  New England Business Brokers Association (NEBBA),  Board Member and recently nominated Vice President for 2012;  Realtor’s Commercial Alliance of Massachusetts (RCA-MA), Affiliate Board Member; and Plymouth Chamber of Commerce, Member.

Barbara identified the highlights for Dunkin’ Donurs Franchise Owners of the “Temporary 504 Refinance Program”: This program expires September 26, 2012 unless Congress extends.

Temporary 504 Refinance Program

• Allows for refinancing of existing debt and cash out for eligible business expenses up to 90% LTV
• At least 85% of the ORIGINAL use of proceeds must have been for an eligible 504 purpose (i.e. purchase real estate, construction etc.).   If the original loan has been refinanced multiple times, it is only the original loan that must meet this requirement.
• Eligible Business Expenses can now be included in project financing.  Expenses must be incurred, but not paid prior to the date of application or will become due within 18 months of date of the application.  Ex:  Repairs, renovations and equipment purchases as well as Rent/Leases, Utilities, Inventory, Payroll, other Working Capital
• Property appraisal within 6 months is required as a condition of approval (but is not required up front).
• The debenture must fund within 6 months from approval date, so improvements should be kept to a minimum.
• This is a great program for franchisees looking to refinance their existing debt, make minor improvements, purchase equipment etc.
• There are no special “hoops” if refinancing with existing lender beyond transcript history, which is all handled by the bank.
• NO Additional equity requirement for special purpose properties (business must be in operation for 2 years)
• The effective rate for the refinance program as of the March 2012 debenture sale was 4.76% fixed for 20 years!

Traditional 504 Program:

• Up to 90% financing for purchase/construction of real estate and or equipment with useful life of 10 years or more.
• Paperwork needed is less than Bank’s require (1 year personal; 2 years business) and most fees can/are rolled into the loan.
• Additional 5% equity required for special purpose properties and/or new business (no historical operations, including affiliates for prior two years) – 5% for each up to 20%

Both programs require bank participation.  Bank term must be at least 10 years and on reasonable terms, but they are in first position.  In the case of the refinance program, 10% Borrower is contributed via property equity.

• 20 year fixed rate for real estate was 4.59%
• 10 year fixed rate for equipment was 3.40%

Frequently Asked Questions: FAQ 504 Temporary Loan Refinancing Program

   Contact: Barbara Arena for more information and to discuss your qualifications: 781-294-2244, barbara@granitestatedev.com

Opponents Claim: “Assembly Bill 2305 will hurt consumers. Franchisors impose standards and expectations on all franchisees to protect the brand’s reputation, other franchise owners nearby, and, ultimately, the general public – their collective customer. This bill will allow sub-standard franchise outlets to continue offering inferior products and services to consumers.”

The Facts Are: Assembly Bill 2305 simply says that franchisors may not terminate a franchise prior to its expiration except for good cause. Good cause means a substantial and material breach of the franchise agreement. Endangering public health or safety is substantial and material.  A light bulb that burns out while the franchisor field manager is inspecting the franchise is not.

AB 2305 also gives franchisees an ample amount of time (60 days) to be in accordance with the current standards and terms equally applicable to all franchisees before termination. This amount of time is not uncommon in all manner of commercial transactions, including leases. When a franchisee gets terminated arbitrarily or without good cause, it is not only the franchisee who is hurt, the lenders, consumers and communities suffer also.

Franchisees are the first line of defense when it comes to protecting the brand’s reputation because franchisees are the franchisors’ ‘first’ customer (i.e., as the purchaser of the franchise). They have invested their own financial and human resources to expand the franchisor’s brand. They don’t want sub-standard franchise outlets in their systems either.

Read More at: BlueMauMau

On April 17, 2012, the United States Court of Appeals for the District of Columbia issued an order temporarily enjoining the National Labor Relations Board (the “Board”) from requiring employers under the Board’s jurisdiction to post a notice of employee rights.  The Board had previously set an April 30, 2012 deadline for the posting requirement. The Court has before it an appeal from the federal district court for the District of Columbia, which ruled that the NLRB requirement was lawful.  Citing “uncertainty” about enforcement of the rule, the Court determined that it should preserve the status quo while considering the merits of the issue on appeal.  In its ruling, the Court noted the conflicting decisions of the lower court and the federal district court in South Carolina.

NLRB Employee Rights Notice Posting Announcement

In response to the action, the Board announced that its regional offices will not implement the disputed rule pending resolution of the issues before the court.  Rather, the agency will defend the rule in the D.C. Circuit and may appeal the adverse ruling from the federal court in South Carolina.

The result of these decisions is that employers need not post the NLRB employee rights poster on April 30, 2012.  Rather, employers may delay posting until the courts decide the various appeals.  MBJ will monitor the situation and provide updates as necessary.  In the meantime, please contact your MBJ attorney with any questions concerning this or any labor and employment law matter.

The National Labor Relations Board has ordered covered, private sector employers to post a notice of employee rights under the National Labor Relations Act. The final rule takes effect (after several postponements) on April 30, 2012.

Generally, covered employers are those private sector employers engaged in interstate commerce who meet jurisdictional standards set by the NLRB. The general retail standard includes businesses with an annual gross volume of business of $500,000 or more. The rule applies to both union and non-union workplaces where these jurisdictional standards are met.

In addition to posting a physical copy of the notice, employers must post the notice on an internet or intranet site if personnel rules and policies are customarily posted on those sites. Employers are not required to distribute the notice by electronic means. Also, there are no record keeping or reporting duties set forth by the final rule.

Translated versions of the notice must be posted at workplaces when at least 20% of employees are not proficient in English. If an employer’s work force includes two or more groups totaling at least 20% of employees who are not proficient in English, then the employer must either post the notice in both languages or post the notice in the language spoken by the greater number of employees, while providing copies in the second language to employees who are not proficient in English.

Copies of the English notice are available at this link: NLRB 8 1/2″ X 11″ 2 Pages Rights Posting Spanish: Spanish NLRB 6 1/2″ X 11″ 2 Pages Rights Posting Other ;languages are avialable at: NLRB.org

The final rule indicates that employers who fail to post the required notice may be found to have violated Section 8(a)(l ) of the National Labor Relations Act. The typical remedy for such a violation is to post a notice for 60 days advising employees of the unfair labor practice. Additionally, the failure to post the notice may result in extending or tolling the Acts six (6) month statute of limitations for fiing an unfair labor practice charge.

Finally, a willful or knowing failure to post may be considered evidence of unlawful motivation in an unfair labor practice case involving other alleged violations of the Act.

Two (2) legal challenges have been filed to the NLRB order. As a result of one legal challenge, the United States District Court for the District of Columbia upheld the Board’s authority to require employers covered by the statute to post a notice of employee rights.

An appeal has been filed of the District Court’s ruling. Additionally, a separate case brought by the United States Chamber of Commerce remains pending in South Carolina. While these two (2) cases remain pending and could result in changes to the posting requirement, franchisees need to remain ready to post the notice of employee rights on April 30,2012.

DDIFO will keep you informed of developments as the April 30 deadline approaches.

Nathan L. Kaitz, an attorney with Morgan, Brown & Joy, prepared this article. He can be reached at (617) 623-6666 or at nkaitz@morganbrown.com with any questions you may have.

Phil is a graduate of Elmhurst College, where he received a BS in Business/Marketing.  During his spare time, Phil enjoys spending time with his family and participating in sport activities.

Phil will be overseeing R.F. Technologies, Inc./Big Dog Surveillance Systems sales team and market channels.  ‪In this new position, Phil will report directly to Tony DeLise, President & COO.   R.F. Technologies, Inc. sells its full line of Quick Service (Drive-Thru) products and services at www.rftechno.com and Surveillance Loss Prevention Solutions on www.bigdogsurveillance.com.

R.F. Technologies, Inc. has serviced more than 50,000 QSR locations for more than 23 years providing drive-thru communication systems, parts, nationwide same day repair and service, speed of service timer systems, order confirmation, free 24 hour live technical support, and customer entertainment solutions.

R.F. Technologies, Inc. can be reached on the web at www.rftechno.com or toll free 24-hours a day at 800-598-2370.