An Innovative Approach To Structuring a Social Enterprise

the kosnar group

News Release

FOR IMMEDIATE RELEASE

 Nonprofit-Owned Business Entities:

An Innovative Approach To Structuring a Social Enterprise

 by 

 Carl Kosnar and Andi Kosnar, Founding Partners

 THE KOSNAR GROUP

San Diego, California (July 23, 2015) - The subject of Nonprofit-owned business entities has fascinated me over the past few years. Our firm has been involved in helping companies franchise their businesses for over 35 years. However, it has been the recent decision to join the Solana Beach ECO Rotary Club that encouraged my business partner, Andi Kosnar, and me to seriously begin to think about the subject of alternative revenue sources for our local Rotary Club. 

PURPOSE

The success of the American franchise business model is well documented through volumes of books and articles, including those I have written, over the last thirty years.  It is not my intent to add to the prolific amount of text that already exists, but rather to explore the opportunities that we perceive in attempting to merge the American franchise business model with a nonprofit “Social Enterprise.” My definition of a Social Enterprise is, “The utilization of a profitable business venture to generate unrestricted income on behalf of a nonprofit charitable organization.” 

Much has been written in recent years extolling the virtues of franchising as it exists in the United States and other countries.  However, there has been a dearth of information and analysis of the economic impact and potential of franchising, or similar economic expansion systems, in developing Social Enterprise ventures.

And Finally

Whatever posture your foundation or charitable governing board may decide to adopt on franchising as a vehicle for structuring a Social Enterprise, one thing appears fairly certain: franchising as a business expansion technique for generating additional revenue for charitable organizations cannot be indefinitely ignored.

For a complete copy of this dissertation please email a request to Carl Kosnar at: 

carl@kosnar.com/.

CARL J. KOSNAR

MANAGING PARTNER

THE KOSNAR GROUP

2306 WALES DRIVE

CARDIFF BY THE SEA, CA 92007

PHONE: (760) 632-8402

MOBILE: (619) 994-2258

FAX: (760) 632-0772

SKYPE: carlandandi

carl@kosnar.com 

www.kosnar.com 

A Trusted Franchise Advisor with 35 Years of Experience 

 

Franchise Litigation Continues to Grow

 the kosnar group

Franchise Litigation Continues to Grow

By

Carl J. Kosnar

August 2018

The franchise relationship between franchisor and franchisee is becoming fraught with problems leading to increased litigation in recent years. Two legal theories that have come to the forefront in the franchise litigation arena are “joint employer” and “vicarious liability.”

Following the global financial crisis many lawyers in multiple jurisdictions have reported seeing increased levels of litigation. In some instances this is often being instigated by franchisors to eliminate under-performing franchisees. Previously, lack of enforcement against under achievers was due to concerns about the economy, whereas now economic conditions have improved in many industries and litigation can be afforded.

Another reason given by some is that long-term relationships between the more mature franchisors and franchisees are changing or dissolving as franchisor management and franchisee generations change, resulting in litigation.

Some lawyers have noted an increase in arbitration, and, in some instances mediation, since some courts are much more in favor of alternative dispute resolution. Where possible, courts are forcing individuals to try these methods first.

In Canada there seems to be a consensus that litigation levels have increased, particularly in relation to class actions, which is a fairly new development in this jurisdiction. Although there have not been an abundant number of class actions held yet, there is definitely an increase on the horizon. As one practitioner explained, “The franchising industry certainly lends itself to class actions given that franchisees can come together with common grievances against the franchisor.”

Disclosure is another issue that has resulted in increased activity in the courts, with reports of active franchisee lawyers “hunting for” potential cases. Five of Canada’s provinces have now adopted the Franchise Act, which includes rules of franchise disclosure documents, with Manitoba the most recent in October 2012. According to one franchisor lawyer, “Franchisee lawyers know they can get an easy win if there was no disclosure. If they find these cases, which they are actively seeking, the question is not if but how much they will get.”

Similarly in the UK there are reports of increasing litigation brought by franchisees and, in tandem, a growing franchisee bar that exclusively represents them. This is part of a larger trend noted by lawyers in such diverse jurisdictions as California, Germany and South Africa, franchisees are becoming stronger. This seems to be a result of, first, increased awareness by franchisees that they have rights and can get legal help, and second, that there is much better representation and organization of franchisees than ever before, with the internet playing an important role.

About the author:

The Kosnar Group litigation support team has provided attorneys and their clients with franchise expert witness and litigation support services for years, with some of our professionals having over 35 years of franchise experience. Our opinions are valued by attorneys, clients, and triers of fact because we are professionals who work exclusively in the franchise industry. We communicate and present our positions in a fashion that attorneys, clients, judges, and juries can understand.

CARL J. KOSNAR

MANAGING PARTNER

THE KOSNAR GROUP

PHONE: (619) 994-2258

FAX: (760) 632-0772

carl@kosnar.com 

www.kosnar.com 

September 1, 2018

 News Release 

Carl J. Kosnar Becomes Consultant for the IFA Social Sector Franchising Task Force

SAN DIEGO, CA--(September 1, 2018) — The International Franchise Association’s (IFA), Social Sector Franchising Task Force Group, has announced that The Kosnar Group’s Managing Partner, Carl J. Kosnar, has been selected as one of its social franchise mentors, to counsel companies seeking assistance with developing a social franchise.

“The subject of social enterprise business entities has fascinated me over the past few years. Our firm has been involved in helping companies franchise their businesses, and license products and services through technology transfer for over 35 years,” said Mr. Kosnar.

“The success of the American franchise business model is well documented through volumes of books and articles, including those I have written, over the last thirty-five years.  It is not my intent to add to the prolific amount of text that already exists, but rather to explore the opportunities that we perceive in attempting to merge the American franchise business model with a Social Enterprise Franchise,” added Kosnar.

Much has been written in recent years extolling the virtues of franchising as it exists in the United States and other countries.  However, there has been a dearth of information and analysis of the economic impact and potential of franchising, or similar economic expansion systems, in developing Social Enterprise ventures.

One of the pioneers in the U.S. to promote social franchising is the IFA Social Sector Franchising Task Force. The Task Force is made up of IFA members, experienced and innovative franchise professionals who have joined together to help social sector franchisors and other NGOs. The Social franchise model creates opportunities for local entrepreneurs to deliver products and services in underserved communities worldwide.

Commercial franchising and social franchising are variations on the same basic strategy for expanding a business. They differ in just two ways:

·         The type and purpose of the products and services offered by the business being franchised

·         The profile of the target customer

Social franchised businesses, like those operated by traditional NGOs (nongovernmental organizations) are primarily developed to offer products and services that people need — not simply want — such as healthcare, safe drinking water, sanitation, clean energy, and education. These are social enterprises whose creation is targeted to achieve goals such as those set in the 2030 Sustainable Development Goals established by the United Nations.

For more information about social enterprise franchising, please contact Carl Kosnar.

Contact:

CARL J. KOSNAR

MANAGING PARTNER

THE KOSNAR GROUP

2306 WALES DRIVE

CARDIFF BY THE SEA, CA 92007

PHONE: (619) 994-2258

FAX: (760) 632-0772

carl@kosnar.com 

www.kosnar.com 

A Trusted Franchise Advisor with 35 Years of Experience