Barry Kurtz dark logoFranchise First and Foremost
June 2010
16000 Ventura Boulevard
Suite 1000
Encino, CA 91436
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OUR TEAM - INTRODUCING CANDICE LEE

Candice Lee, Esq.Candice Lee has recently joined our team as an associate.

Candice previously worked as an associate with O'Melveny & Myers L.L.P. in San Francisco where she represented public and private companies in securities matters and corporate governance.  Prior to that, Ms. Lee worked as an associate with McDermott Will & Emery L.L.P. in Irvine where she gained experience as a transactional attorney on a wide range of real estate and merger and acquisition transactions.  She also served as an Extern for The Honorable Ernest M. Hiroshige, Superior Court in Los Angeles.  She received her J.D. from the University of Southern California, Gould School of Law, in 2005.  Candice's background is ideal for a franchise lawyer.

Franchise law is a complex and specialized area of law requiring focused training and expertise which Candice brings to the table. Her experience in corporate governance and securities law is exactly the right stepping stone for the practice of franchise law.  She grew up in a family owned, franchised restaurant system and understands on a personal level the ins and outs of franchising.

We're happy to have Candice on our team.
 
FRANCHISOR 101 - NORTH CAROLINA TAX COLLECTORS EYE FRANCHISORS
 
North Carolina, strapped for cash like many other state governments, wants to join the growing list of states seeking to force franchisors to act as tax collectors.
 
Legislation recently introduced in the North Carolina House of Representatives would require that franchisors operating in that state submit annual reports to the state detailing the names and addresses of their franchisees along with the gross sales of each franchisee, the total income reported by each franchisee, and the total amount of any sales by the franchisor to each franchisee.
 
It's not clear at this writing whether the House legislation will become law, but North Carolina isn't the first state to enlist franchisors in the hunt for new tax revenues, and it won't be the last. New York already requires out-of-state franchisors to report sales and royalty data on their New York operations (see our August 2009 Newsletter), and the California Franchise Tax Board - the Golden State's tax collection agency - wants non-resident franchisors who receive royalty, rent, or lease income from California sources to pay California income taxes. Worse, if they don't, it wants their California franchisees to withhold 7 percent of all payments made to the franchisors on royalties, rents, or leases (See our October 2009 Newsletter).
 
These developments make the lesson clear: The states are becoming ever more inventive in their search for revenue, making it all the more imperative that franchisors review the legal status of the franchise and other agreements in force in every state in a disciplined effort to avoid taxation wherever they can.
FRANCHISEE 101 - NEED FINANCING?  CALL YOUR FRANCHISOR
 
For franchisees, as for business owners of all stripes, financing is the key to success, and like other business owners, franchisees have a hard time these days getting banks to cough up loans on reasonable terms.
Some franchisees, however, have an ace in the hole not available to other business owners - deep pockets close at hand with a keen understanding of the franchise industry and a desire to help it prosper: their own franchisors.
 
According to a recent report in the New York Times, some franchisors are stepping into the lending void created by the two-year-old financial crisis, which has made banks and other lenders wary about doing business with small and mid-sized franchisee businesses.
 
Not surprisingly, when franchisors do step into that void, they often do so only to help out the most successful of their own existing franchisees. A few adventurous franchisors, however, are offering even start-up capital to promising new and prospective franchisees.
 
The International Franchise Association, the industry's main trade association, estimates that this year, franchise businesses will need more than $10 billion in financing to sustain or expand existing operations. Banks, on the other hand, appear on track to lend only $6.7 billion,
Franchisors won't fill that gap entirely, but some are willing to do their part, according to the New York Times article.
 
Some have created "captive" lenders (similar to captive, or wholly-owned insurers formed by big corporations to handle health and property risks) to make loans to their own franchisees. Others are supporting their franchisees by offering to guarantee part of any conventional bank loan. Still others are offering to ease the load on their successful franchisees by cutting royalty, fee or lease payments.
 
The goal in all such efforts is clear: Hard times hit franchisees just as they do other entrepreneurs, and without financing, some will not survive. Franchisors, however, prosper when their franchisees do, and if that means taking on the duties of lenders until the economy turns upward again, many are willing to do so.
 
Barry Kurtz Interviewed on Voice of America's Stars of PR
 
Hosted by Cindy Rakowitz, PR News has referred to "Stars of PR" as filling a void in the public relations business".  Cindy has a reputation of conducting insightful interviews with professionals across a spectrum of disciplines that clarify key issues on current challenges within their areas of expertise.      
 
Listen to the interview on Voice of America
This communication published by Barry Kurtz, APC is intended as general information and may not be relied upon as legal advice, which can only be given by a lawyer based upon all the relevant facts and circumstances of a particular situation.

Copyright � Barry Kurtz, A Professional Corporation 2010 
All Rights Reserved.

 
In This Issue
Our Team - Introducing Candice Lee
Franchisor 101: North Carolina Tax Collectors Eye Franchisors
Franchisee 101: Need Financing? Call Your Franchisor
Barry Kurtz Interviewed on Voice of America's Stars of PR
Contributing Experts - Scott Zarret & CJ Aberin - KBKG, Inc. Cost Segregation
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More About Us
Contributing Experts

Scott Zarret &
 CJ Aberin
 
KBKG, INC. Cost Segregation & Tax Credit Specialists 
 
Cost Segregation: Why Your Clients Can Benefit From a Comprehensive Study

Barry Kurtz
Barry Kurtz is a prolific writer on the subject of franchise law. From due diligence to franchise appraisal, his articles are a valuable resource to any franchisee and franchisor.  He was recently named a Certified Specialist in Franchise and Distribution Law by the State Bar of California Board of Legal Specialization.



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