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Columbia, SC – September 13, 2012 – Repealing crowdfunding would take away the only parts of the new JOBS Act that would help small business, small business advocate Frank Knapp warned after getting word that a Tennessee Congress may seek repeal of the crowdfund provisions of the new law.

President Obama signed the Jumpstart Our Business Startups Act into law on April 5, 2012. The law revises federal securities laws, and include provisions that enable small businesses to raise up to $ 1 million per year from small investor via online, crowdfund investing portals.  Members of the industry learned that Rep. Steve Cohen of Tennessee was seeking co-sponsors of a bill to repeal the crowdfund provisions of the JOBS Act.

In an email dated September 15, 2012, Rep. Cohen reportedly requested members of Congress to join him in sponsoring a “Protect Investors from Crowdfunding” bill. “The bill would repeal the well-meaning but flawed CROWDFUND Act provision from H.R. 3606, Jumpstart Our Business StartUps Act (JOBS Act),” Rep. Cohen’s office wrote. ”Even if regulators do everything right in terms of imposing appropriate investor protections, most of those who invest through crowd-funding sites are likely to lose some or all of their money.  At worst, crowd-funding web sites could become the new turbo-charged pump-and-dump boiler room operations of the internet age.”

“We would respectfully oppose any effort by Representative Cohen to repeal the crowdfund provision in the JOBS Act through his Protect Investors from Crowdfunding legislation,” Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce and vice chair of the American Sustainable Business Council snapped back this morning in correspondence to Rep. Cohen’s office.  ”Such a successful effort would eliminate any benefit the Act has for local small business while leaving in place the more risky provisions that favor high-investment Wall Street-bound businesses.”

Mr. Knapp said that the final version of the JOBS Act created a 2-tier regulator system would encourage economic development and lower the chance of fraud and investment risk.

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Commentary by David Drake

Perhaps the next time you see Donald Trump on TV he, won’t fire anyone. Instead, he may be offering some stock in a new casino that some of you may want to invest in.

David Drake

Securities and Exchanges Commission (SEC) Chairman Mary Schapiro supported the proposal to remove the solicitation ban of Regulation D, exemption 506 last Wednesday Aug. 29, 2012 in Washington DC.  ”I recognize that there are very real concerns about the potential impact of lifting the ban on general solicitation,” SEC Chairman Mary Schapiro said.   ”While I’m prepared to bring forward today’s narrow proposal, I look forward to the continued examination of this critically important market.”

The SEC has not allowed general solicitation of private offerings since its creation in 1933.  The Jumpstart Our Business Startup Act (JOBS Act), which was signed into law April 5, 2012 by President Obama, outlines that the ban on solicitation under this fundraising exemption is to be lifted.  The proposal the SEC submitted, albeit late from it’s 90-day deadline expiring July 4, 2012, now has 30 days for public commenting. At that point, without major changes, it is converted into applicable law.

As it is proposed, and while the changes are minor, they are yet gargantuan in financial media terms. Perhaps Donald Trump will be able to go on TV and offer stock for cash in his next Casino.  Something that has never been allowed for a private offerings. The caveat is that the investor must be accredited. This means having $200,000 in annual salary the last two years and and an expected income of that amount for the following year The amount is $300,000 for married couples of $1 million in net worth, excluding the couple’s personal home but including the family’s vacation home. We won’t discuss the intricacies of what this means to SEC and FINRA.

However, it means that you can now solicit via TV, conferences or online to raise cash for stock, as long as the buyer is an accredited investor.  You can now market online to raise money from people willing to invest.  You would not be limited to having broker dealers finding the investors, but you could now mass market your business and reach a larger investor pool for less and quicker.  It is a paradigm shift the world has never seen. TV and internet advertising will explode from fundraising entities like we have never seen.  It is an upheaval and an opportunity of gargantuan media opportunities. Corporate strategy will be in the center of these services. European firms will flock to the US market faster than before, and we will see a rush and spur of amazing magnitude. This is the biggest impact of the JOBS Act we have ever expected.

Will we see Mr. Trump on TV soon prompting his washing detergent or Casino stock for cash?  I bet you will.

Commentary by David Drake, a board member of the CfPA. Mr. Drake is founder of LDJ Capital and The SoHo Loft. The Soho Loft Capital Creation Events “TSL”, subsidiary of LDJ Capital, is a world leader in conference speaking and paneling on crowd funding and the JOBS Act (Jump Start Opportunities for Business StartUps) Act signed into law by President Obama April 5, 2012. T

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The first glimpse at how crowdfund investing may work under the JOBS Act is just months away. The JOBS Act — signed into law as the Jumpstart Our Business Startups Act — will permit entrepreneurs and other small businesses raise up to $ 1 million in capital per year from small investors through online crowdfunding portals., member of the Crowdfunding Professional Association, partnered with EarnMBA  to put together an infographic on the JOBS Act and the history of crowdfunding. A picture is worth a thousand words.

JOBS Act Infographic &

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Commentary by Jason Best and Sherwood Neiss

Jason Best and Sherwood Neiss

On August 21, 2012, the North American Securities Administrators Association (NASAA) blasted crowdfund investing, listing it among the top dangers on its 2012 list of investor traps. Crowdfunding in its current state is where a large group of people pool small dollar amounts to help fund ideas. Examples of rewards-based crowdfunding, which is currently legal, include sites like RocketHub and Kickstarter. Crowdfund investing, which should be legalized under the JOBS Act but which the SEC is still writing the rules for, will allow not just donations but would enable regular people to make investments in private companies and entrepreneurs in exchange for a real stake. (Unfortunately, the SEC, which was supposed to meet on the matter today, has once again delayed the process — more on that shortly.)The trouble with the NASAA assessment of crowdfunding fraud is two-fold: One, they used a gaming company as an example that was caught two years ago (long before crowdfunding legislation was created) and prosecuted in August. Two, they failed to mention that this so called “crowdfunding” company was funded under the old securities laws (pre-JOBS Act), which makes fraud easier to commit as they keep investments out of the public light, allowing for backroom deals and billions in losses by average American. Some commentators have suggested that Facebook is an example of this. The old system is broken, which is why the fraud occurred. The gaming company did not use crowdfunding, as it is not legal yet. Crowdfunding won’t be allowed till 2013, as the SEC is still making the rules under which the market will form. Today’s security laws do not have the strong disinfectant power of social media built into them.

The many-to-many communication of the social Web creates the opportunity for crowd-diligence – this is not possible in one-to-one communications (like those emails you receive from princesses of far away lands promising great riches…). Where can we look for real-life examples of fraud in crowdfund investing? In the seven years crowdfund investing has been legal in Australia and in the two years it has been legal in the UK, no cases of successful fraud have been discovered. In donation-based crowdfunding in the US, fraud has been caught rapidly, and always before funds are distributed, as social network uncover the truth. Platforms like RocketHub have created sophisticated algorithms to detect fraud that layer on top of the crowd-diligence process. Even though crowdfunding has experienced far less fraud than has been experienced under traditional capital-raising mechanisms, has strong support from the president, and has overwhelming bi-partisan support by a sharply divided Congress, the road to enacting the legislation is proving rocky.

On August 22, 2012, the SEC delayed its second deadline for lifting the ban on general solicitation and has now postponed the meeting for a week. It makes one wonder if the JOBS Act (and the jobs that could be created through it) will be tangled in a sea of red tape. What is true is that many people do not fully understand what crowdfunding is and the role social media plays in vetting a deal prior to funding. Therefore many believe that grandmothers will squander their savings and parents will lose their children’s college money by irrationally investing in crowdfunding opportunities. Shysters will enter the marketplace and try to take off to the Cayman Islands with investor dollars. This position ignores all the investor safeguards that exist in the legislation. It also makes the assumption that the crowd, (i.e. hundreds to thousands of people who personally know the company founders or have second- or third-degree connections to the founders) cannot possibly be smart enough to a) identify a good idea, b) determine who is a credible individual, or c) make an informed decision about an investment that they decide to make with their hard-earned dollars.  Just because there’s a new form of investing doesn’t mean there will automatically be more willing investors. Our position has never been that raising money via crowdfund investing will be easy — it won’t be, nor should it be. But it will provide another route to funding for entrepreneurs with great ideas (many of whom may not live in Silicon Valley, Boston, or New York City) and main street businesses that need additional capital to expand and create jobs. Crowdfunding proponents will share examples of how the crowd has successfully weeded out fraud on donation-based crowdfunding platforms since it has been up and running for the past five years. As recently as May, on Kickstarter, the crowd used social media to shutdown a scam just by sharing collective wisdom. When people brought their accusations to the Kickstarter comments, the instigators made a few weak attempts at deflection then quietly shut down, having raised just under $5,000 (far short of their goal, so that money was never actually released). When it comes to crowdfund investing, there’s nothing more transparent than social media. It is the disruption that makes crowdfund investing possible. The potential loss by an individual is strictly limited based on income level. Compare this with the fact that anyone can login to their Schwab account and put their entire life savings on a triple down ETF for gold and loose it all in minutes. Bottom line: Entrepreneurs and the American people are the ones suffering here. We stand ready to work with the SEC to protect investors with commonsense legislation to enable this market to form in an orderly fashion.

Jason Best and Sherwood Neiss, co-founders of the Crowdfunding Professional Association,  led the U.S. fight to legalize debt and equity based crowdfunding, co-authored Crowdfund Investing for Dummies and founded Crowdfund Capital Advisors where they provide strategy and technology services those seeking to benefit from crowdfund investing.

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Peter Shankman

Peter Shankman will be the opening keynote speaker for the Crowdfunding Bootcamp October 9, 2012 at the Ravella in Las Vegas, NV.

Peter Shankman is an entrepreneur, author, speaker, worldwide connector and small business evangelist. Peter is best known for founding Help A Reporter Out, (HARO) which in under a year became the de-facto standard for  journalists looking for sources on deadline, offering them sources around the world looking to be quoted in the media. HARO is currently the largest free source repository in the world.

He is also recognized worldwide for initiating new ways of thinking about social media, PR, marketing, advertising, creativity and customer service. To launch an effective Crowdfunding campaign, you must start with a clear message that can be used to attract potential investors.  Who better to teach this vital principal than Peter Shankman, the master of “Networking through Social Media.”

Read more here.

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Securities and Exchange Commission

Washington DC (August 22, 2012) – Drawing sharp criticism from lawmakers, the Securities and Exchange Commission delayed a hearing to consider rules that would allow the advertising of certain securities as provided in the new JOBS Act.  Rep. Patrick McHenry, co-author of the crowdfunding provisions of the JOBS Act and chair of the House Subcommitee on TARP, Financial Services and Bailouts of Public and Private Programs, reacted to the delay by accusing the SEC of “kicking the can down the road.” He demanded that the SEC chair appear before the Subcommittee on September 13 to show what progress the SEC was making in implementing rules under the JOBS Act.

SEC Chair Mary Schapiro (Courtesy House Oversight Committee)

The Jumpstart Our Business Startups Act signed into law on April 5, 2012 required the SEC to implement rules to eliminate the prohibition against general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act. Under the law, investors may use general advertising to make Reg D offering to accredited investors. The JOBS Act required the SEC to implement the rules by July 4, 2012. During a hearing before the House Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs on July 28, 2012, SEC Chair Mary Schapiro testified that the SEC would not meet the July 4 deadline. However, Ms. Schapiro told the Subcommittee that she expected general solicitation rules during the summer of 2012.

The SEC originally scheduled a hearing to consider the general solicitation rules for August 22, 2012. However, the SEC announced on August 21, 2012 that the hearing to consider the rules “will not be considered during the Commission’s Open Meeting on August 22, 2012 at 10:00 a.m.,” and further stated  ”This item is being rescheduled for consideration at an Open Meeting on August 29, 2012 as announced in a separate meeting notice.”  The SEC did not post any explanation on its site for the delay.

Rep. Patrick McHenry (Courtesy House Oversight Committee)

Word of the delay prompted sharp criticism from Rep. Patrick McHenry, a co-author of the crowdfund provisions of the JOBS Act and Chairman of the TARP Subcommittee. In a letter addressed to Ms. Schapiro, Rep. McHenry protested “I am deeply troubled by the information you conveyed to me on the phone earlier today. During our conversation, you conveyed your decision to propose a rule which would at some future date implement Section 201 of the Jumpstart Our Business Startups Act (JOBS Act). As you know, by issuing a proposed rule, rather than an interim final rule, the Commission is unlikely to finalize the rule until next year. By kicking the can down the road, you are abdicating your responsibility to follow the law, failing to fulfill your sworn commitment to this Subcommittee, and ignoring the will of Congress and the President of the United States.”

The JOBS Act also requires the SEC to implement rules to allow crowdfund investing by the end of 2012. Concerned about the rulemaking progress, Rep. McHenry demanded that the SEC produce to his subcommittee by 5:00 pm EST on August 30, 2012 all communications and documents between or among the SEC commissioners and staff regarding potential SEC action to implement the general solicitation rules. Rep. McHenry further requested Ms. Schapiro to appear at a Subcommittee hearing scheduled for September 13, 2012 to examine the SEC’s implementation of the JOBS Act.

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Candice Klein, managing board member of the Crowdfunding Professional Association, won Business Insider’s Start-up competition in New York today, winning $75,000 in cash and other prizes.”In the past few years, the 31-year-old founder has entered 27 startup competitions and won 25 of them,” Business Insider announced today. “The other two she entered aren’t finished yet.” You can read more here.

Ms. Klein’s 2012 Startup presentation can be viewed here:

Congratulations, Candace!

By A. Brian Dengler

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Forbes Magazine contributor Chance Barnett named Crowdfunding Professional Association chair Sherwood Neiss and other CfPA board members among the “Top 10 Most Influential People in Business Crowdfunding.”

“This is my list of crowdfunding revolutionaries; these are the ten I see as innovators, game changers and thought leaders impacting future business crowdfunding – shaping what it will mean for innovation, entrepreneurship, economic growth and jobs,” Barnett explained.

CFIRA board members listed in the top 10 include:

Jason Best and Sherwood Neiss

1.  Jason Best and Sherwood Neiss, co-founders of CFIRA and Crowdfund Capital Advisors. Best and Neiss co-authored parts of the framework of H.R. 2930, which contained the crowdfund investing provisions that became part of the JOBS Act signed into law on April 5, 2012. “Off the Hill, they galvanized a national grassroots coalition of thought leaders,” Barnett wrote.

Candace Klein

2. Candace Klein, CIFRA co-chair and found of and Bad Girl Ventures. “Everyone in crowdfunding seems to know and respect her,” Barnett said.

“These folks helped lead the charge in crowdfunding legislation, and beyond,” Barnett observed. The article encourages businesses and the public to “get involved in crowd funding now.” The Jumpstart Our Business Startups Act authorizes small business to raise capital from small investors on crowdfunding sites. However, the Securities and Exchange Commission must formulate regulations before the launch of any equity crowdfunding. The Forbes article can be viewed here.

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Las Vegas, Nevada – This past April President Obama signed the Jobs Act into law and included a unique component, Crowdfunding, where entrepreneurs seeking investors and equity in their companies can receive funding from outsiders via the Internet. This new trend has swept through our nation and given hope to those who may have had their own “light bulb” moment, but simply didn’t have enough capital to get their idea off the ground.

Two companies at the forefront of the Crowdfunding craze, Laughlin Associates, Inc. and Crowdfunding Roadmap™, will co-host the first event of its kind for business owners looking to kick start the crowdfunding process. Crowdfunding Bootcamp will take place October 9-11, 2012 in scenic Lake Las Vegas at the Ravella Resort and Spa and feature some of the industry’s most highly sought-after speakers and experts.

“Crowd funding offers hope to millions of creative people who, with the help of their grass roots community, will create, invent, and deliver the revolutionary products and services that will fuel the next economic boom” Aaron said. “The fact that the government is trying to put new opportunity and power into the hands of the small business sector is the most exciting news entrepreneurs have heard in a long time.”

Aaron Young, CEO of Laughlin Associates is a true advocate for small business growth.

Ruth Hedges, CEO and founder of Crowdfunding Roadmap™ and advisory council member on the Crowdfunding Accreditation for Platform Standards (CAPS) board, has witnessed the increased excitement around crowdfunding since early last year, which prompted the creation of this bootcamp-style event for crowdfunders of all ages.

“Things are taking off like wildfire, and entrepreneurs need to be prepared as they move forward,” Hedges stated. “Entrepreneurs will receive the information they need to launch their dreams on a solid platform and gain instant exposure to the right investors. This is really designed as a one-stop shop for serious crowdfunders; here they’ll get access to the best and the brightest.”

Crowdfunding Bootcampwill feature a unique component known as the Funding Portal Pavilion, where crowdfunders can meet face-to-face and collaborate with investors to discuss their funding options. This will offer start-ups and existing business owners the chance to examine the level of interest that investors have in their companies and ideas and see how much capital they can actually raise.

Each and every segment of this 3-day event has been designed to educate business owners on the requirements they must meet in order to start crowdfunding. Past successful crowdfunders will share their experiences onstage and some of the industry’s top experts will come and share their knowledge with attendees for a complete journey during this hands-on, in-depth conference.

The event has already procured sponsorships from the Crowdfunding Intermediary Regulatory Advocates (CFIRA), the Crowdfunding Professional Associates (CfPA), Ellenoff, Grossman and Schole LLP, 1-800 Accountant, Laughlin Associates, CaptureTrackConvert, Fund All Be All, Navocates and Crowdcheck.

“Since announcing this event the response has been overwhelming.” Hedges said. “Between the attendees and the speakers we are going to have an amazing program.”

To register for this dynamic event, please visit Crowdfunding Bootcamp to secure an early bird registration price before August 20, 2012.

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Guest Column by Joel R. Buckberg.

Joel Buckberg

On April 5, 2012, President Obama signed into law the “Jumpstart Our Business Startups” Act (the JOBS Act) The intended purpose of the JOBS Act is to spur job creation by small companies and start-ups by relaxing the regulatory burdens of raising capital. In this article, we focus on Title III of the JOBS Act, otherwise known as “crowdfunding,” and how franchisors and franchisees are uniquely suited to take advantage of this new registration exemption under the Securities Act of 1933, as amended, to sell unregistered securities to the public.

Crowdfunding enables small or start-up businesses that may not have access to traditional methods of capital financing to raise capital via the Internet and social media, typically from small-dollar investors.1

At first glance, crowdfunding appears to be an innovative and easy way for start-ups to obtain financing by using the vast reach of the internet. However, Congress’s concerns over investor protection and fraud prevention are evident throughout Title III. Issuers, brokers and funding portals must comply with substantial informational disclosure requirements and undertake affirmative fraud prevention measures.2  Aspiring crowdfunding issuers should note that the JOBS Act requires the Securities and Exchange Commission (SEC) to adopt “such rules as the [SEC] determines may be necessary or appropriate for the protection of investors” within 270 days after the JOBS Act being signed into law. Thus, the SEC, which openly expressed its opposition to crowdfunding prior to the passage of the JOBS Act (including criticism by SEC Chairwoman Mary Schapiro that crowdfunding regulation would be akin to “walking backwards”), will most likely implement burdensome compliance and disclosure requirements.3

Why is this good news for franchises? Unlike other potential issuers, franchisors, and to a lesser extent franchisees, are already subject to rigorous disclosure requirements.4  Much of the disclosure mandated by Title III is already encompassed in a franchise disclosure document (“FDD”).5  Therefore, while complying with the extensive disclosure requirements of the JOBS Act may be cost prohibitive and time consuming for most startups, franchisors will have a leg up in that they’ve already prepared most of the disclosure.6  From the franchisee side, much of the business planning, financial reporting and financial statement preparation mandated by a franchisor can provide the disclosure necessary to meet the likely standards, or at least provide the basis for rapid development of the necessary information.

The basics of crowdfunding are fairly simple. Crowdfunding offerings are capped at $1 million per year. The issuer must be a U.S. company and cannot be a reporting (i.e., filer of periodic reports under the Securities Exchange Act of 1934) or investment company. There are caps on annual investment amounts for investors. Investors with an annual income or net worth below $100,000 may only be permitted to invest, in the aggregate, the greater of $2,000 or 5 percent of such investor’s annual income or net worth. For an investor with an annual income or net worth greater than $100,000, the aggregate annual investment is limited to 10 percent of such investor’s annual income or net worth, with a maximum aggregate amount capped at $100,000. Except under certain circumstances, crowdfunded securities are restricted securities with a one-year holding period.

Conducting a crowdfunding offering requires substantial issuer and offering information disclosure. Issuers are required to file certain information with the SEC, and must provide the same to potential investors and intermediaries, including information regarding their business, ownership and capital structure, and the offering itself. A condensed version of some of the issuer disclosure requirements and liability risks appears below.

  • Issuers must make an initial filing with the SEC which contains, among other things, (i) name, legal status, physical and website addresses; (ii) the names of directors, officers and 20 percent stockholders; (iii) a business plan and description of the business; (iv) financial information, which, depending on the size of the offering, may only include a certified income tax return for an offering of $100,000 or less, or audited financial statements for offerings of $500,000 or more; (v) a description of the purpose and intended use of the offering proceeds, the target offering amount, the price of the securities and the method of their valuation; (vi) the ownership and capital structure of the business, including the terms of the offered securities as well as each class of the issuer’s securities, a description of how the issuer’s principal stockholders’ rights could negatively affect the purchasers of the crowdfunded securities, risks associated with minority ownership and examples of how future securities will be valued; and (vii) any other information required by the SEC.
  • At least once a year, issuers must also file with the SEC and provide to investors their financial statements and reports of results of operations, as the SEC deems appropriate.
  • Purchasers of crowdfunded securities will have a private right of action against an issuer’s officers or directors for material misstatements and omissions in connection with the offering. An issuer will be liable if it makes an untrue statement of a material fact or omits a material fact required to be stated or necessary to make a statement not misleading, provided the purchaser did not know of the untruth or omission. Though crowdfunded securities are considered “covered securities,” and thus not required to be registered with any state agency, an issuer will still be liable under state securities laws prohibiting fraudulent or unlawful conduct in connection with a securities transaction.

Issuers are also prohibited from advertising the terms of a crowdfunding offering, except for notices directing investors to the funding portal or broker, and may not compensate any thirdparty promoters without disclosing the compensation to investors.

Does this mean that a franchisor can slap a new coversheet on an FDD and launch a crowdfunding offering? No, but with a modest supplement describing the corporate documents and attributes not otherwise covered in the FDD, a franchisor can be quickly compliant with the likely SEC rules and the launch of the offering will be achieved more quickly. Additional considerations will include obtaining consent from the auditors to use the franchisor’s financial statements and audit opinion for such purpose, and creation of an investor questionnaire, modeled in many respects on the franchise application, that will elicit the eligibility and limitations of potential investors.

How often does a franchisee ask whether he or she can invest in the franchisor? With public companies, the answer is simple. With a new or small franchisor, the answer is usually not often, because the franchise and securities offering are separate. Crowdfunding offers franchisors the opportunity to consider paired or “paperclip” offerings, where the prospective franchisee is also offered the opportunity to invest in the franchisor’s equity.7  Existing franchisees who are successful and committed to the success of the franchise concept offer another readily available pool of potential investors. The FDD Item 20 information about franchisee contact information is a potentially useful tool for a crowdfunding offering.8  The regular communications vehicles between franchisor and franchisee offer the opportunity to promote the offering to a group of potential investors without the need for any public solicitation. That communication pipeline, together with the franchisor’s extranet accessible only to franchisees with authorized access, could be a major benefit for the issuer-franchisor.

From a legal theory perspective, the legal duties, obligations and interests of the parties in a crowdfunded franchisor where franchisees are participating investors will need some further thought and guidance. The franchisor and its officers are not fiduciaries for its franchisees, but the officers are indeed fiduciaries for their franchisee-investors and the franchisor. Will a franchisee who is an investor be able to assert an aggressive position under the franchise agreement that can harm the franchisor without liability to co-investors? Defining these roles and the associated legal conduct standards will evolve as SEC enabling regulations permit crowdfunding to commence.

Reprinted with permission by Joel R. Buckberg. Joel Buckberg is of counsel in Baker Donelson’s Nashville office, where he is a member of the Corporate Group. Mr. Buckberg counsels clients on corporate and asset transactions and operations, particularly in hospitality, franchising and distribution, including strategic planning and transactions, financing, mergers and acquisitions, system policy and practice development, regulatory compliance and contract system drafting. Prior to joining Baker Donelson, Mr. Buckberg was Executive Vice President and Deputy General Counsel of Cendant Corporation.

1 JOBS Act: Crowdfunding Summary, Practical Law Company (last visited Jun. 8, 2012),
2 See H.R. 3606 §§ 302(b), 304(a).
3 Benn Protess, Regulator Seeks Feedback on JOBS Act, (Apr. 11, 2012, 4:16 PM),
4 FTC Disclosure Requirements and Prohibitions Concerning Franchising, 16 C.F.R. § 436.5 (2012).
5 Compare H.R. 3606 § 302(b), with 16 C.F.R. § 436.5 (2012).
6 16 C.F.R. § 436.5 (2012).
7 Franchisors would need to review and comply with state securities laws, often administered by the same regulatory authority as franchising in merit review registration states, before undertaking such an offering.
8 |16 C.F.R. § 436.5(t)(4) (requiring disclosure of “the names, and the address and telephone number of each of their outlets”). Franchise agreements routinely designate a legal notice contact for official notices, which is another source of the information.