In a $3 million lawsuit, actor Jesse Eisenberg (star of The Social Network) claims that he was exploited by the producers of the direct-to-DVD movie, Camp Hell, when they overplayed his small role in the film by featuring his likeness on the DVD cover art. Franchising laws help to prevent this type of overstatement or puffery by requiring disclosure of important information to potential franchisees.
Some franchisors continue to use a different Franchise Disclosure Document for each state that has a franchise or registration law. This approach increases the administrative burden on franchisors, as well as the risk of unintentional violation of a state’s franchise law where more than one state law applies to a transaction.
Differences between California’s statute and regulation on negotiated franchise sales can be confusing even to experienced practitioners. This article explains the reasons for the differences and offers suggestions for resolving the conflict between the two provisions.