Business Law (including Franchises)

Baker, Todd H and Kathryn Judge, ‘How to Help Small Businesses Survive COVID-19’ (Columbia Law and Economics Working Paper No 620, 2020)
Abstract: Small businesses are among the hardest hit by the COVID-19 crisis. Many are shuttered, and far more face cash flow constraints, raising questions about just how many will survive this recession. The government has responded with a critical forgivable loan program, but for many of these businesses, this program alone will not provide the cash they need to retain workers, pay rent, and help their business come back to life when Americans are no longer sheltering in place. This essay calls on regulators to find new and creative ways to work with existing intermediaries, including banks and online lenders, who have the infrastructure and tools needed to help small businesses get the additional loans they need to survive and thrive. Leveraging existing institutions could enhance the speed, scale, and scope of the government’s response, all critical virtues in the efforts to support small business.

Berman, Douglas A et al, ‘Struggling Through the Pandemic: Cannabis Social Equity During COVID-19’ (SSRN Scholarly Paper No ID 3628533, 16 June 2020)
Abstract: In March 2020, in response to the COVID-19 national emergency, states across the United States began issuing shelter-in-place orders curtailing operations of individual businesses based on ‘essential’ and ‘non-essential’ classification. Virtually all states with legalized medical cannabis, and the majority of adult-use states, allowed cannabis establishments to remain open albeit often with significant restrictions on their operations. Yet, the cannabis industry, and small, minority-owned or social equity designated businesses in particular, are not insulated from the broader economic shockwaves spreading through the country. In April 2020, the Drug Enforcement and Policy Center conducted a survey asking patients/consumers and cannabis industry professionals about the challenges they were experiencing and government responses. Hoping to fill a gap in early discussions of the impact of the COVID-19 crisis, we were especially interested in the impact on cannabis industry participants designated as social equity businesses. The results indicate that the COVID-19 pandemic has both introduced tremendous new challenges for the cannabis industry and exacerbated long-standing difficulties for businesses in this arena. If small, minority-owned and social equity businesses are to survive, they need to be treated by the system like any other regular small business venture. While regulations and safeguards are necessary, these businesses need to be able to operate as a true business, rather than a semi-legal venture with no access to loans, banking, insurance, tax relief, and flexible deliverable modes.

Boon, Gert-Jan et al, ‘The COVID-19 Pandemic and Business Law: A Series of Posts from the Oxford Business Law Blog’ (Oxford Legal Studies Research Paper No 15/2020, 2020)
Abstract: The COVID-19 Pandemic is the biggest challenge for the world since World War Two, warned UN Secretary General, António Guterres, on 1 April 2020. Millions of lives may be lost. The threat to our livelihoods is extreme as well. Job losses worldwide may exceed 25 million.Legal systems are under extreme stress too. Contracts are disrupted, judicial services suspended, and insolvency procedures tested. Quarantine regulations threaten constitutional liberties. However, laws can also be a powerful tool to contain the effects of the pandemic on our lives and reduce its economic fallout. To achieve this goal, rules designed for normal times might need to be adapted to ‘crisis-mode’, at least temporarily. Business Laws in particular fulfil an important function in this context. Our livelihoods depend on how well businesses are able to navigate through the current crisis.Beginning in early February 2020, the Oxford Business Law Blog has published posts on how Business Laws could contribute to containing the effects of the COVID-19 Pandemic, and on how they need (or need not) to be adapted to achieve the desired effect. This working paper collects the posts published throughout March in chronological order. Thematically, the focus is on finance, financial regulation and insolvency laws. This is not surprising as the most pressing problem businesses face right now is to manage their cash flow. We hope that the contributions in this paper inspire more work by scholars and help policymakers worldwide to adopt the right measures to reduce the damage caused by the Pandemic.

Bradley, Christopher G and Hannah Oates, ‘The Multi-Level Marketing Pandemic’ [2021] Tennessee Law Review (forthcoming)
Abstract: Among the many societal effects of the COVID-19 pandemic has been a sharp rise in the activities of multi-level marketing companies (MLMs). MLMs are business enterprises in which participants seek not only to sell products to friends, family, and social media contacts, but also to recruit them as MLM participants, with the promise of ‘building their own business from home.’ False promises often pervade MLM sales pitches. Evidence shows that few participants see even a dollar of profit from their MLM work; the vast majority of recruits quickly abandon their MLM dreams and lose their investments. Yet the pitch has become all the more appealing in the course of the COVID-19 pandemic. Many people are desperate—unemployed and in need of immediate earnings and also in need of flexible, at-home work due to health concerns and family responsibilities. MLMs have been particularly appealing to the working mothers who, evidence shows, have borne the brunt of the impact of COVID-19 both on employment and on childcare and other household-related responsibilities. Regulators have long scrutinized and fought the worst abuses of MLMs. They have sought to find and shut down the unscrupulous MLMs that are in fact nothing more than fraudulent pyramid schemes, and also to curtail the misrepresentations and exaggerations that are all too often the stock-in-trade of participants in more legitimate MLMs. But regulators, including the Federal Trade Commission, face significant legal and practical limitations in their ability to promulgate and enforce MLM regulations. This Article examines how regulators have addressed MLM activity and proposes means of stemming the pandemic-driven expansion of unlawful MLM activities. It assesses efforts by regulators, by social media companies, and by self-regulatory organizations set up by MLMs themselves. Comprehensive, long-term success at curbing the abuses of MLMs will require more significant regulatory action that is currently permitted by law. But immediate steps outlined here can provide some much-needed relief for consumers harmed by the unlawful MLM activities that have been fostered by the COVID-19 pandemic.

Buchan, Jenny and Rob Nicholls, ‘The Challenges of Navigating the COVID-19 Pandemic for Australia’s Franchise Sector’ (2020) 48(2) Australian Business Law Review 126–137
Abstract: A pandemic forces franchisors, franchisees and other stakeholders to look with fresh eyes at contracts that usually remain in the bottom drawer. Government light-touch legislation is challenged, and the franchise sector must deal with forcefully drawn contracts and competition from more agile non-franchised businesses. All concerned must come to grips with how contract law addresses a pandemic, if at all, and how courts might interpret established contractual and statutory obligations and legislation enacted to respond to COVID-19. This article reviews franchising through the lenses of force majeure and frustration, and considers how the courts might interpret responses to COVID-19 in the light of the good faith obligation under the Franchising Code of Conduct. It also canvases federal and State regulatory responses in the context of franchising. The article concludes that franchisors will need to depart from a one-size-fits-all response to a more bespoke approach on this occasion.

Covic, Dragan, Ana Covic and Milos Petrovic, ‘Legal and Business Aspect of Franchise and Franchise Business and Measures During the Covid-19 Pandemic’ (75th International Scientific Conference on Economic and Social Development, 2-3 December 2021) 229–239
Abstract: Franchise is a business privilege defined by franchise law through which the franchisee operates, performs the franchise activity of selling certain products or performing defined services by the franchisor. The franchisee uses the trademark, the service mark of the franchisor, all based on his work and methods in the defined activity, use of franchise privilege. Based on the franchise agreement, the franchisee pays the franchisor a franchise fee. A franchise agreement is based on the principles of contract law, concluded with the consent of the will of the contracting parties and belongs to unnamed contracts and by its nature is a mixed contract, since it also contains elements of some other contracts. National and international regulations affect the protection of intellectual property rights and determine the content and manner of performing franchise activities. Franchising as a segment of entrepreneurship is a complex legal and economic business model, created between two independent economic entities. Franchise business can be viewed from several business aspects, such as: the manner and method of growth of economic entities that are geographically conquering new markets; enable growth of production and distribution capabilities of franchisors and recipients; form of new entrepreneurial activity of economic entities towards winning and starting a business activity with the creation of new jobs; the emergence of a new organizational form and a new form of restructuring in organizational terms with the beginning of new distribution channels and finding new sources of funding. At the same time, franchise business from the aspect of the theoretical concept gained its practical verification of business success through the operationalization of franchising as a way and method, "Know-how“, a concept that ensures the development and sustainable growth of the business entity in accepting franchising as a new opportunity in the economic development of the business entity. Also, today in these times of lockdown and closed stores and restaurants, franchisors and franchisees were and still are affected by the COVID-19 pandemic and requested to adapt their sales model, planning and implementation to the circumstances, because a whole franchise system has been challenged.

Cresanti, Robert, ‘The Impact of COVID-19.’ (2020) 52(4) Franchising World 8–8
Abstract: An editorial is presented which discusses the Impact of COVID-19. It discusses about how the new federal coronavirus laws will impact the business from Littler Mendelson’s Michael Lotito and James Paretti; IFA board member Jerry Crawford from Jani-King shares important information about how to safeguard your business, employees and customers; and the rest of this issue is still dedicated to providing important information about franchising to our members that we know you’ll find value from.

Crisp, Anne, Joan Heminway and Gary Martin, ‘Business Law and Lawyering in the Wake of COVID-19’ (2021) 22(2) Transactions: The Tennessee Journal of Business Law 365-391
Extract from Introduction : The public arrival of COVID-19 (the novel coronavirus 2019) in the United States in early 2020 brought with it many social, political, and economic dislocations and pressures. These changes and stresses included and fostered adjustments in business law and the work of business lawyers. This Article draws attention to these COVID-19 transformations as a socio-legal reflection on business lawyering, the provision of legal services in business settings, and professional responsibility in business law practice. While business law practitioners, like other lawyers, may have been ill-prepared for pandemic lawyering, we have seen them rise to the occasion to provide valuable services, gain and refresh knowledge and skills, and evolve their business operations.

Deere, Kelly and Christine Gottesman, ‘We Can Do This: Reopening the Non-Public Office Sector and Keeping It Open During the COVID-19 Pandemic’ (SSRN Scholarly Paper No ID 3709466, 1 September 2020)
Abstract: In March 2020, COVID-19 forced many non-essential businesses with non-public office settings to physically close their doors and conduct their businesses remotely. For many non-essential businesses, physical office space shut down and many employees began working from home or telecommuting. As states reopened their economies, the CDC, OSHA and a number of state agencies provided guidance for employers to reopen and/or maintain a safe workplace in these office setting businesses. While these guidelines are not uniform in size, scope or content, we conclude that there is sufficient guidance for these employers to safely open their businesses and stay open. We recommend that CDC and OSHA issue joint guidance to create a uniform and not piecemeal approach for office workplace safety and that the guidance be updated regularly. Since the non-public office settings are at a low-risk of COVID-19 exposure, we recommend that both federal and state governments provide guidance and not more formal standards or regulations. There is no one-size fits all approach to the non-public office setting therefore these employers should have the flexibility to implement the recommendations that work best for them.

Germann, Stewart, ‘Force Majeure Provisions in Franchise Agreements in New Zealand’ (2021) 40(4) Franchise Law Journal 681–691
Abstract: Events of Force Majeure A force majeure clause must first define the ‘events of force majeure.’ I. Force Majeure Clauses in General A contract might specifically provide for and manage the legal effect of external events by the inclusion of a force majeure clause. Many franchise agreements contain a force majeure clause; that is, a clause governing events happening beyond one’s control like an act of God or a pandemic. Chitty on Contracts states that a ‘force majeure clause’ is normally used to describe a contractual term by which one (or both) of the parties is entitled to cancel the contract or is excused from performance of the contract, in whole or in part, or is entitled to suspend performance or to claim an extension of time for performance, upon a happening of a specified event or events beyond the party’s control. Such clauses may assume a variety of forms, but, in New Zealand, the term the usual force majeure clauses to apply has been held void for uncertainty. Force majeure clauses have been said not to be exemption clauses, although it is difficult to draw any clear line of demarcation between the two types of clauses, since the effect of each may relieve a contracting party of an obligation or liability to which the party would otherwise be subject.

Kristianto, Fennieka and Fidela Gracia, ‘Liability of the Parties in Franchising Due to Pandemic Covid-19’ (2021) 1(2) Corporate and Trade Law Review 119–140
Abstract: The occurrence of Covid-19 in recent years provokes a great deal of issues all around the world including Indonesia. It influenced every aspect of life and the most prominent one falls within the economic field. Businesses were dealing with a lot of difficulties and one of them is encountered within the franchising business between the relationship of Indonesian franchisee and foreign franchisor in which a dispute arose within their franchise agreement. This is due to the fact that plenty of restrictions were imposed that cause the Franchisor incapable of importing raw materials for the Franchisee in Indonesia, hence, the Franchisee is unable to start their business here in Indonesia. The Indonesian franchisee has likewise paid a certain amount of the initial fee, thus, the Indonesian franchisee requested a full refund for the delay of the service. Normative legal research is applied in determining the liability of each party and the best possible solution in overcoming the issues within this franchising business. Furthermore, this issue shall be contemplated as hardship instead of force majeure and renegotiation shall be conducted by both parties.

LeBrun, Daniel, ‘Keeping the Lights on through Dark Times: How Subchapter V Bankruptcy Should Protect Small Businesses Decimated by the Pandemic’ (2021) 37(3) Touro Law Review 1575–1604
Abstract: Small to mid-market, independent businesses are at the heart of our economy and play a pivotal role in job creation. While it’s estimated by the House of Representatives that these companies account for over half of overall U.S. employment, they have been traditionally underserved in bankruptcy law. Historically, the resources necessary to complete a chapter 11 bankruptcy are not within reach for these small to mid-market businesses. Passed in 2019, the Small Business Reorganization Act has modified the Bankruptcy Code to provide new avenues for these small businesses in need. Impactful in its own right, it has emerged as a lifeline to small businesses decimated by the pandemic. This Note will focus on the fundamental changes to the Bankruptcy Code brought by the SBRA and what improvements can still be made.

Lotito, Michael J, James Paretti and Littler Mendelson, ‘New Federal Coronavirus (COVID-19) LAWS: A Summary of the New Laws Impacting Your Franchise during the Coronavirus Pandemic’ (2020) 52(4) Franchising World 16–19
Abstract: The article discusses New Federal Coronavirus Laws. Topics include The FFCRA creates two limited-duration programs for providing workers impacted by the coronavirus with paid sick leave and paid ‘family’ leave under the federal Family and Medical Leave Act (FMLA); and the CARES Act provides additional economic support for individuals and businesses to maintain operations, retain workers and increase unemployment benefits under state-administered unemployment compensation systems.

Moszyńska, Anna and Krzysztof Świątczak, ‘The Impact of the COVID19 Pandemic on Polish Commercial Law’ in Frydrych-Depka, Anna, Maciej Serowaniec and Zbigniew Witkowski (eds), Pandemic Poland: Impacts of Covid-19 on Polish Law (Vandenhoeck & Ruprecht, 2021)
Abstract: The paper is part of a general discussion on balancing the conflicting interests and finding the right solutions that, on the one hand, could avoid too much interference with the principle of the market economy, and in particular the principle of freedom of business conduct and, on the other hand, could appropriately protect, the supreme values, such as human life and health. 149

Pacheco, Thomas, ‘Top Legal Issues for 2020: The Legal Developments You Need to Know’ (2020) 52(4) Franchising World 24–27
Abstract: The article discusses legal developments related to Covid-19. Topics include California Consumer Privacy Act went into effect on January 1, 2020, the CCPA establishes consumer rights with regard to data; California’s AB 5 law finally came into effect in January 2020; and The Protecting the Right to Organize (PRO) Act. :

Rachmawati, Irma and Mohd Zakhiri Md Nor, ‘Legal and Shariah Framework of Crowdfunding in Batling Covid-19: Some Observation in Indonesia’ (2021) 6(2) BiLD Law Journal 1–9
Abstract: Crowdfunding provides a group with an alternative investment option. Its existence makes it simple for people in an organisation who have limited funds. Especially for those who have been afflicted by the COVID 19 pandemic. Crowdfunding can be an alternative financing method for Indonesian small and medium-sized businesses. The purpose of this study is to investigate the legal and Shariah framework for crowdfunding in Indonesia. This paper also investigates how Crowdfunding can benefit the Micro, Small, and Medium Enterprises (MSMEs) sectors during Covid-19 in Indonesia. The report employs qualitative legal research as its methodology. A descriptive and analytical process is used to analyse the data. This paper found that Crowdfunding benefits the MSMEs sector during the Covid-19 period. Some models of crowdfunding are based on the Shariah principles of wakaf, zakat, waqf, and sadaqah. There is no clear law governing online crowdfunding. Online crowdfunding is also vulnerable to fraud, hijacking, and illegal activity. As such, it is critical to improve Indonesia’s legal and regulatory framework for crowdfunding activities.

Sabatino, Gianmatteo, ‘COVID-19 and Freedom to Conduct a Business’ (2021) 1(1–3) Legal Policy and Pandemics: The Journal of the Global Pandemic Network 225–270
Abstract: The present survey is meant to offer a general overview concerning the different approach that courts in several jurisdictions on a global scale adopted to deal with the potential and actual conflicts between Covid-19 related emergency measures (justified by public health interests) and the freedom to conduct a business. Such conflicts encompass either situations where business activities were closed down or limited due to the pandemic or situations in which closed businesses requested compensation or questioned the appropriateness of the relief schemes designed by public authorities. The relation between public health and economic freedoms in times of pandemic is a complex one, which is also deeply affected by how the interactions between the principles of the economic constitutions are shaped and function in different legal systems. The issue, therefore, necessarily requires the assessment of the critical connection between law and economic policy. The analysis carried out in the survey mainly revolves around case law and places great emphasis on the use of general legal principles such as proportionality, reasonableness, precaution, and non-discrimination to carry out a balancing of conflicting rights and interests. At the same time, given the factual complexity of the concrete situations triggering such conflicts, the analysis also highlights how the specific features of the ‘legal emergency’, such as the declaration of a state of emergency or the reliance on scientific evidence concerning the evolution of the pandemic, may affect the courts’ reasoning. The goal of the survey is to provide a general comparative landscape of the different approaches chosen by courts to deal with some of the economic consequences of the pandemic.

Tong, Edwin, ‘Singapore Government’s Responses to the COVID-19 Crisis: An Overview and Analyses of the Salient and Novel Legal Issues’ 2021 Singapore Comparative Law Review 28–41
Abstract: Amidst the pandemic, the Singapore Government rolled out various crisis management measures to minimise and cushion the economic impact, preserve jobs and capabilities, and support households. First, the Ministry of Finance passed a total of four budgets in 20204 which committed close to S$100 billion of support measures to deal with COVID-19. Some of the key measures to support businesses and workers included the Job Support Scheme, which provided wage support to employers, in which firms in the hardest-hit sector received the most support. Other key measures included the SGUnited Jobs and Skills Package to help Singaporeans access immediate short-term as well as longer term job opportunities and acquire job-related skills and capabilities. In addition, the Self-Employed Person Income Relief Scheme provided cash pay-outs to self-employed persons with less means and family support whose livelihoods have been affected by COVID-19. The COVID-19 Support Grant and COVID-19 Recovery Grant also provided temporary financial support to workers in lower- to middle-income households that had suffered job loss or significant income loss due to COVID-19. Second, the Monetary Authority of Singapore worked with banks on a series of voluntary initiatives by the financial institutions, such as the deferment of payments on mortgages. Third, the focus of this article, the Ministry of Law ('MinLaw') introduced legislation to provide reprieve to affected businesses and individuals. MinLaw enacted the COVID-19 (Temporary Measures) Act ('COTMA'), which was amended seven times to refine Singapore's response to the evolving COVID-19 situation, and also introduced the Simplified Insolvency Programme ('SIP') and Sole Proprietors and Partnerships ('SPP') Scheme to provide distressed small businesses with an avenue for simplified and costefficient debt-restructuring and insolvency proceedings. This article provides a brief overview and analysis of the salient or novel legal issues arising from some of the key relief measures introduced by MinLaw:
a) Relief for inability to perform contractual obligations under Part 2 of COTMA;
b) Rental relief framework under Part 2A of COTMA;
c) Relief for contracts affected by construction delays under Part 8 of COTMA;
d) The Re-Align Framework under Part 10 of COTMA; and
e) The SIP and SPP Scheme.

Trakic, Adnan (ed), Covid-19 and Business Law (De Gruyter, 2021)
Book Summary: The COVID-19 pandemic has had extraordinary effects on human lives and economies around the world. Many countries have introduced various measures to stop the spread of the virus and preserve human lives and livelihoods. Some commentators have considered these measures extreme, such as the restrictions imposed on people’s movement and lockdown of countries’ borders. While these measures have undoubtedly saved lives and curbed the spread of the deadly virus, they have also produced some unintended legal implications for individuals and businesses, particularly in the areas of contractual obligations, employment relationships, tourism and hospitality, company law, competition law, human rights and the rule of law, protection of vulnerable groups like migrant workers, and access to judicial and legal services. COVID-19 and Business Law: Legal Implications of a Global Pandemic identifies and discusses specific legal challenges caused by the COVID-19 pandemic in these areas and suggests possible ways in which they could be remedied.

Yang, Y Tony and Brian K Chen, ‘Liability Waivers for COVID-19: Law, Policy, and Practice’ (2021) Journal of Public Health Management and Practice (advance article, published online 30 June 2021)
Abstract : As businesses reopen, the practice of asking customers to sign COVID-19 liability waivers is increasing throughout the United States. Although the courts have not yet decided the enforceability of COVID-19–related liability waivers, existing case law, as well as new executive and legislative actions, suggests that such waivers may offer some protection to businesses from liability. Nevertheless, we believe that the legal and ethical rationales underlying liability waivers are not applicable to a pandemic. We further argue that the challenging nature of and the substantial unknowns about the novel coronavirus make waivers contrary to public policy. Fears over floods of litigation appear thus far unfounded, and businesses should not be relieved from their obligation of taking reasonable safety precautions. Waivers are not a panacea to reopen businesses in an ongoing pandemic, and the ultimate protection against liability is to operate in a manner that minimizes the spread of the virus consistent with evidence-based guidelines.

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