Labor Day is a useful checkpoint for franchisors. It arrives after the summer rush and before the year-end push, making it a practical time to pause, review risks, and ensure the system is positioned for the months ahead. A legal review now can help prevent bigger problems later. Let’s explore four questions every franchisor should discuss with legal counsel before summer ends.
1. Do our documents still match how we operate?
Franchise agreements, franchise disclosure documents (FDD), and operations manuals should reflect the way the system actually works. If the business has changed during the year, the legal documents may need to be updated
Federal and state laws require annual FDD updates, but franchisors are not relegated to only a once-a-year review. As previously discussed, material changes require franchisors to update their FDDs. This includes changes such as a new address for the franchisor, changes in Item 2 (which describes the business experience for the last five years of individuals connected to the franchise, including the directors and principal officers), commencement of a new product line involving an additional investment of 20% or more of the current average investment, and changes in fees.
Volatility and changes in national and world markets can also influence FDD updates. In August 2025, the North American Securities Administrators Association (NASAA) released new guidance clarifying the evolving material changes — such as shifts in economic conditions, supply chains, or key costs — that may require franchisors to amend their FDDs well before the next scheduled filing.
This is not just a paperwork issue. When documents and practices diverge, a franchisor may face confusion over enforcement, inconsistent expectations, or avoidable disputes with franchisees. The best time to catch those mismatches is before they become embedded in daily operations.
- New technology, vendors, and operating requirements should be reflected in the governing documents.
- Changes in support, training, or quality control procedures should be reviewed for consistency with the agreement and manual.
- Franchise agreements should continue to track the business as it is actually run.
Ultimately, any unusual terms should be reviewed before they are applied systemwide.
2. Are we ready for renewal and deadline issues?
Labor Day is also a smart time to look ahead to renewal, expiration, and notice deadlines. Franchisees’ renewal rights often require timely written notice. If a franchisee misses a contractual deadline for notice of its intent to renew, the franchisor can deny the renewal (subject to state law). Franchisors should review franchise agreements to (i) ensure that franchisees with expiring agreements will be timely operating pursuant to renewal agreements and (ii) determine whether stronger communication is necessary to alert franchisees about any pending deadlines, especially if the relationship has been mutually beneficial.
That makes calendar management critical. When an agreement is timely renewed, the franchise relationship is strengthened and the system can be better maintained.
3. Are we creating joint-employer risk?
One of the most important questions a franchisor should ask is whether its policies, training, supervision, or brand standards could be viewed as too much control over franchisee employees. The joint-employer issue matters because regulators and courts may look at whether the franchisor’s conduct stays within the bounds of brand protection or crosses into employment control.
A lawyer can help identify where the line is and how to protect the brand without inviting unnecessary labor exposure. That review is especially useful before fall planning, when many systems revisit operations, training, and compliance materials.
4. Are we prepared for the next phase of growth or enforcement?
A final question is whether the system is ready for what comes next: That could be expansion, enforcement, or consolidation due to market conditions. Franchise counsel can help determine whether the current structure is strong enough to support growth while still protecting the brand and reducing risk.
This review can also reveal weak spots in compliance, documentation, or internal processes before they become systemwide issues. For franchisors, that is often the real value of legal planning: it helps avoid reactive decisions and keeps the business ahead of problems instead of behind them.
- The company should have a clear plan for enforcing standards consistently.
- Compliance tools should be strong enough for the current size and structure of the system.
- Recurring disputes should be reviewed for possible policy fixes.
- Expansion planning should account for legal risk before growth accelerates.
Now is an ideal time to ensure sales personnel are properly trained on franchise sale laws, especially if new employees have come on board.
Preparation is Key
The questions above are just four of the many that should spark a dialogue with your franchise lawyer. The strongest franchise systems aren't simply prepared for disruptions and economic fluctuations; they're built to reduce the likelihood of risks and disputes through thoughtful planning, clear expectations, and ongoing collaboration.
Experienced franchise lawyers will also ensure your system complies with federal and various state laws.
Be sure to subscribe to Lusthaus Law’s monthly newsletter for more Insights. An upcoming installment will feature four questions franchisees should ask their lawyer.
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