On Monday, May 11, 55-year-old Craig Stevens of Newport Beach pleaded not guilty in a scheme allegedly designed to bilk investors out of more than $4 million by selling ‘bogus’ In-N-Out Burger franchises in the Middle East, according to an LA Times article.

Stevens, who was in federal court in Santa Ana, pleaded not guilty to wire fraud. Prosecutors allege that in January of 2014, Stevens contacted potential investors via email, peddling the franchises for approximately $150,000 per location. Royalties would cost an added $250,000 annually, according to the article.

Charge documents filed by the U.S. attorney’s office claim that through his email scheme, Stevens solicited about $4.27 million. Court documents also allege that in June of last year, Stevens passed off a fake licensing agreement for an In-N-Out franchise via email to a Lebanese investor, who was not identified.

While Stevens made claims to investors of partnerships and franchise agreements, In-N-Out Burger Inc., based in Irvine, has been in business since 1948 and is privately owned. The company says it has no such agreements with third parties. Stevens is scheduled to go on trial on the wire fraud charge in July.

As seasoned Los Angeles business attorneys, it is sometimes difficult to believe how gullible some individuals are, particularly when it comes to email or other schemes on the Internet – but it happens every day.

Before you invest in any franchise, it is vital to have a skilled attorney review all agreements, restrictions, rights, purchase or sales agreements, and other relevant documentation regarding the purchase of a franchise. Franchise law is complex, particularly given the fact that so many businesses are crossing into countries outside of the U.S. today.   Franchises are also subject to numerous regulations, so it is essential to have every detail analyzed with a fine-tooth comb.

If you’re considering investing in a franchise opportunity, speak with the professionals at Spotora & Associates first.

On Monday, May 4 it was announced that Steve Easterbrook, new CEO of McDonald’s Corporation, would reorganize the company’s business units, cut costs, and sell restaurants to franchisees in an effort to transform the world’s largest restaurant chain into a “modern, progressive burger company.” Easterbrook made the announcement via video, in which he vowed to eliminate “cumbersome” management and thoroughly analyze the business for inefficiencies in an effort to save the corporation about $300 million net annually, most of which he anticipated would be realized by the end of 2017.

Mike Andres leads the U.S. McDonald’s market, which news reports at Reuters claim account for more than 40% of the fast-food giant’s operating income. He will continue to lead this market. In the video, Easterbrook said that in the year 2015, $8 to $9 billion would be returned to shareholders of McDonald’s.

Ultimately, the goal is to improve how consumers perceive McDonald’s restaurants in terms of slow service and food quality. In recent years, McDonald’s has been in a decline in the burger fast-food franchise industry. Easterbrook said in his announcement following one of the iconic fast-food restaurant’s worst years that he would “not shy away from the urgent need to reset this business.” Easterbrook took the McDonald’s helm on March 1 of this year.

Prior to Easterbrook taking over the helm, it was planned that McDonald’s would sell 1,500 restaurants by 2016. Under Easterbrook’s management, the plan is to sell 3,500 restaurants by 2018 to franchisees, which would result in an increase of franchisee ownership around the world from 81% to 90%. However, it appears that investors were not thoroughly impressed by Easterbrook’s plan, considering that the announcement seemed to provoke a “prove it” sentiment in immediate reactions noticed in investors according to Stephen Anderson, analyst at Miller Tabak & Co.

Australia, Canada, France, Germany, and the UK will comprise the new “international lead” market according to Reuters, which accounts for 40% of the burger franchisors’ operating income.

McDonald’s has been a successful franchise in the U.S. and many international markets for decades, and has proven a successful business model for tens of thousands of franchisees. However, the latest news can make anyone who is thinking of investing in a McDonald’s franchise apprehensive, to say the least. Anyone considering a franchise investment should consult with an experienced and knowledgeable attorney before making a decision that could change your life, and your financial future. Count on the Los Angeles business attorneys at Spotora & Associates for sound legal guidance and support in franchising or any business matter.

As experienced Los Angeles business attorneys we understand the issues franchisees often face in running a franchise.  Recently, a former 7-Eleven executive allegedly blew the whistle on company executives who put him in charge of ‘Operation Take-Back,’ a project that was designed to rid the franchise stores in New Jersey of South Asian and Indian franchisee owners, deemed no longer a part of the company’s vision.

According to a news article at NJ.com, Ian Shehaiber was hired by 7-Eleven as a district manager/field consultant in 2010.  Soon after, he was given a $1,500 cash reward and named 2011 Rookie Field Consultant of the Year.  However, all of that changed when his bosses placed Shehaiber in charge of the project in 2012.

Shehaiber filed suit against 7-Eleven in December in state Superior Court in Middlesex County, thereafter the company requested a change of venue to the U.S. District Court due to federal labor and discrimination law issues.  According to Gerald Marks, Shehaiber’s attorney, the franchise has taken action over the past two years to interrogate, dehumanize, and ridicule Indian franchisees in their effort to retake the 7-Eleven stores and resell them at a profit.

Margaret Chabris, a spokeswoman for 7-Eleven, said in a statement that “The allegations made in this complaint are false.”  She went on in the statement to say that the franchise is dedicated to protecting other franchisees, employees, and guests by terminating the relationship with franchisees who violate the franchise agreement or the law when appropriate, and that “a few” franchisees had been caught in violation of the law and/or their contractual obligations.  Shehaiber’s attorney did not comment on Chabris’ statement.

The lawsuit claims that Shehaiber was instructed to take part in the project in mid 2012, the goal being to identify franchisees who had stolen money from the franchise.  Shehaiber also claims in the suit that meetings regarding the take-back were fueled by aggressive anti-Indian tactics and racial remarks.  He said that he was constantly in fear that he would be terminated if he spoke up; Shehaiber also claims in the lawsuit that due to his Christian faith and his supervisor’s contempt for those who are non-Muslim, he was discriminated against and forced to work in a hostile environment.

Executives at 7-Eleven who were allegedly involved in ‘Operation Take-back’ claimed that franchise owners who were Indian made a habit of attempting to take advantage of others.

It will be interesting to learn how this all turns out, and whether 7-Eleven is able to put the stores in question under corporate control.

Whether you are a franchisor or franchisee, it is important to consult with a Los Angeles business attorney specializing in franchising when problems or issues surface that you are not certain how to deal with.  At Spotora & Associates, our staff has the skill, knowledge, and experience to successfully advise and handle any and all franchise issues.

You are excited about owning a franchise, have asked those you know who are franchisees about their experiences and success, and perhaps have already begun work on your business plan. Is this enough, or do you need to do more to protect ensure you are protected from a legal standpoint? The quick answer – you need to hire an experienced Los Angeles franchise lawyer. Here are a few of the reasons why taking this step is so important to your success.

Franchise attorneys understand what really matters. From FDD’s or Franchise Disclosure Documents to contracts, lawyers who focus in this area of the law know what is essential to ensuring you are up-to-date with the latest franchise laws, and the various restrictions/obligations you must abide by as a franchise owner in order to avoid termination.

Guidance on how to set up your franchise business. Few franchisees understand the various options when it comes to setting up their business as a C-Corporation, LLC (Limited Liability Corporation), or Subchapter S Corporations. What are the differences, and which is best in your situation in regards to how your business will be taxed? A skilled franchise lawyer in LA can provide the guidance you need in this area of your business.

When it looks like you are destined to fail, you need an attorney’s expertise. You never expected your franchise to fail, but it does happen – all too frequently, unfortunately. The location you chose may not have been the best, or you failed to profit fast enough to stay in the game. Perhaps the franchisor is partially to blame for the failure of your business. Franchisors have a responsibility to help franchisees with the “ins and outs” of the business in regards to location, the development of new services or products, the success of other franchisees, competitive factors such as price, and other details. Another reason it’s important to hire a capable franchise lawyer – and to thoroughly read and understand the FDD.

Those involved tell you that hiring an attorney will be a waste of money. If there is one red flag in owning a franchise, this is it! Franchise developers often advise potential franchisees that the agreement contains no negotiable terms, so hiring a lawyer will simply be a waste of money. Essentially, the top priority of the franchisor is to get the agreement signed, without a professional reading over the terms to advise you of any potential problems or issues that may in fact be negotiable.

Are you considering a franchising opportunity? Going forward with this type of business opportunity involves a certain level of uncertainty and stress. By hiring a qualified Los Angeles franchise lawyer, you will enjoy peace of mind – not to mention a more restful sleep at night.