43rd Annual International Franchise Association Legal Symposium

October 05, 2010, 06:43 PM

Some quick takeaways from the 43rd Annual International Franchise Association Legal Symposium in Washington, D.C. (a meeting of over 500 franchise lawyers):

  1. Tight financing continues to inhibit sales of franchises. Financing for franchisees was down over 40% in 2009 (from 2008). Also, the number of new franchise systems was down significantly in 2009 from the peak years of 2007 and 2008.
  2. The trend continues toward sophisticated, multi-unit franchisees. In 2009, for the first time, a majority of franchise units nationally (53%) were owned by multi-unit franchisees, many of whom owned franchises in multiple franchise systems. Large, financially strong multi-unit franchisees are likely to continue to develop, and have significantly greater bargaining power and financial leverage with franchisors than single-unit franchisees.
  3. The use of Item 19 financial performance representations in Franchise Disclosure Documents (“FDD”) has almost doubled in the last five years, from less than 18% of all FDDs filed in 2004 to over 35% in 2009. We believe this trend is likely to continue. —Stephen E. Story