Because the specific rules and regulations of the franchise industry extend to a brand’s digital presence, as well.
The franchise industry is known for the strict parameters under which it operates, and while these specifications may appear excessive to the untrained eye, all have been established to create a level playing field for franchisees. The onus to adhere to the legal stipulations in place in franchising falls largely on the franchisor, especially as it pertains to digital presence and what can and cannot be said on a franchise development site.
1851 caught up with franchise lawyer Michael Einbinder, founding partner of Einbinder and Dunn, LLP, to determine the top three things franchisors must be cognizant of concerning their franchise development sites as it relates to legal requirements at the state and local level.
Proactively ensure ADA compliance
As awareness grows around the American Disabilities Act (ADA), which states that all electronic and information technology must be accessible to people with disabilities, website developers— and by extension, the companies that they partner with—are accountable for maintaining these standards now and into the future.
This goes for all sites, consumer-facing or otherwise. ADA compliance continues to be something that brands need to be cognizant of as it relates to potential digital barriers for individuals with disabilities, and an honest effort should be made to ensure that any and all visitors are able to access content on the franchisor’s site on both the business and consumer end.
“In general, all business websites should comply with ADA requirements,” Einbinder said. “Make sure you’re designing your sites in accordance with regulations related to accessibility and privacy,” he advised.
As in any sort of advertising for franchising, franchisors must make it clear that the information on their franchise development website, as well as the site’s overall intention, is not to solicit an offer for a franchise.
“We tell people to specify that the site was designed for informational purposes only, and that an offer to buy a franchise is made in pursuant to the FDD only,” Einbinder said. “This comes in the form of a disclaimer on all pages that says an FDD is required for a purchase of this franchise.”
Einbinder also noted that in regard to a brand’s financial performance representations as laid out in Item 19 of the FDD, what can and can’t be said on a franchise development site is very specific.
“Brands can provide high-level information about what's in their Item 19, but it can’t go much further than a sentence or two,” he said. “You can say ‘our stores average X,’ or ‘stores older than Y average Z.’”
Equally as important as brevity is a footnote that directs readers back to a brand’s Item 19 for more detailed information. “It goes without saying that the information presented on your franchise development site must be consistent with what is stated in your FDD,” Einbinder said, noting that if a brand elects not to provide Item 19 information its FDD, that under no circumstances can any be posted on its franchise development website.
Brands can’t offer a franchise agreement to a candidate until they've complied with requirements stated by local and federal rules. When discussing available territories on their franchise development sites, brands must operate in accordance with the rules laid out by registration states, Einbinder said.
“Laws regarding registration states must be adhered to both ways,” he said. “Franchisors must make clear that territories or locations are either available to be sold in these states only; or, conversely, they must expressly state that they are not growing in states in which they have not filed their FDD.”
Be clear either way, Einbinder noted, and as with other aspects of the franchise development website, refer candidates back to the FDD as the guiding document in their purchase journey.