Breaking The Mold

Legal Eagle

Andrew a. caffey, a specialist in franchise and business opportunity law in Bethesda, Maryland, was initiated into franchising during what one might call "peacetime."

"[I got into the industry] right at the end of the push to regulate franchising," Caffey recalls. "New legislation dropped dramatically at the end of the '70s."

Caffey has watched franchise legislation ebb and flow ever since, from the institution of the Federal Trade Commission's (FTC) Franchise Rule in 1979 to the Reagan years that liberalized the laws as they applied to franchisors.

"The longer list," asserts Caffey, "is what hasn't changed. The process of advising franchisors hasn't changed; they have the same list of legal concerns." Franchisors also still face what Caffey calls a "strong barrier to entry" in the form of various expenses, from legal obligations to franchise development to annual CPA audits.

The future, of course, is still uncertain, but Caffey sees some likely changes on the horizon. "Some form of mandated earnings claims is one possibility," he notes. "The FTC may also fine-tune the definition and regulation of business opportunities."

Caffey still marvels at the wide spectrum of people he deals with on a daily basis. "The variety is spectacular," he says. "What surprises me is that, 20 years later, I still get questions I've never heard before."

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This article was originally published in the May 1997 print edition of Entrepreneur with the headline: Breaking The Mold.

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