Answers - Legal

The world a franchising is quite an industry full of litigation. One of the favorites of franchisee attorneys in class-action lawsuits used to sue the franchisor for misuse of the promotional funds, which the franchisees have contributed

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

to. There are a number of huge cases with large settlements, some of which have nearly bankrupted the franchisee company.

It is for this reason that I decided to upgrade the clauses in our franchisee agreement and the information on the

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

promotional fund and its contributions in the confidential operations manual. Here below is a copy of the clauses that I inserted into my franchisee company’s franchise agreements;

2.3 Promotional Fund

2.3.1 Franchisee Contributions

Fra

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

nchisee will pay to Franchisor each month as a contribution to a Car Wash Guys System promotional fund (the “Promotional Fund”), if and when established, one hundred dollars ($100) per calendar month. Promotional Fund contributions are due

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

and payable in full at the same time and in the same manner as continuing royalty fees. Payments of Promotional Fund contributions are not refundable.

2.3.2 Use

Franchisor will not commingle Promotional Fund contributions with its genera

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

l funds, but will hold all Promotional Fund contributions from all its Franchisees in one or more designated accounts.

The Promotional Fund may be used as determined by Franchisor:

(a) to purchase national, regional, and local advertisin

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

g in broadcast, print, internet and electronic media;

(b) to be used exclusively to meet any and all costs of maintaining, administering, researching, directing and preparing advertising and/or promotional activities (including, among oth

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

r things, the costs of preparing and conducting television, radio, magazine, newspaper and internet advertising campaigns); direct mail and outdoor billboard advertising; marketing surveys and public relations activities; use of advertisin

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

g agencies and website developers to assist with projects, website development and maintenance and internet informational and advertising links and promotional brochures, CD-ROMs, video tapes and other marketing materials for the Franchiso

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

r. (c) to acquire the services of in-house and outside advertising, public relations professionals and website developers;

(d) to carry on other advertising and promotional activities as Franchisor may reasonably deem advisable to increas

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

demand for Services offered by its Franchisees, whether Core Services or Optional Services; and

(e) to pay the reasonable expenses of administering the Promotional Fund, including the reasonable compensation of Franchisor’s employees and

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

expenses of the advisory committee described in Section 2.3.3 (if established by Franchisor) while working on behalf of the Promotional Fund.

2.3.3 Administration

The Promotional Fund will be administered by the Franchisor or by an adve

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

rtising agency selected by the Franchisor. Franchisor, in its sole discretion, may establish a Franchisee advisory committee from time to time to provide input and suggestions regarding use of the Promotional Fund and the effectiveness of

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

programs funded by the Promotional Fund. If the Franchisee advisory committee is appointed, it will consist of representatives of Franchisor and representatives of the Franchisees, with the representatives of Franchisees constituting a maj

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

rity of the members thereof. Franchisor shall retain sole discretion over the use of the Promotional Fund.

2.3.4 Accounting

Franchisor will account to Franchisee annually for all Promotional Fund contributions received and spent. The acc

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ounting will be made by written report within ninety (90) calendar days of the end of the year setting forth the total contributions received from all Car Wash Guys System Franchisees as a group and all expenditures made by Franchisor, tog

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ether with the balance on account in the Promotional Fund as of the date of the report.

2.3.5 Commercial Relationship

Franchisor and Franchisee agree that the rights and obligations of the parties arising from the Promotional Fund and al

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

related matters are governed solely by this Agreement, and that this Agreement and the Promotional Fund are not in the nature of a “trust,” “fiduciary relationship,” or similar special relationship. Franchisor and Franchisee agree that th

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

e Promotional Fund and this Agreement are based on an ordinary commercial relationship between independent businesspersons.

-------- ---------- -----------

Every franchisor who has a promotional fund which is paid into by the franchisees

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

must pay special attention to this issue to keep from being sued. It is wise to contact a franchise attorney to best prepare a strategy to protect your company from liability and lawsuits over the promotional fund. Consider this in 2006

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Information and examples of the five customer types. This article will cover the five different types of customers allowing you to better understand how to tune the marketing message for your product.

As a leader of staff it is very challenging to keep quiet, and to listen. This is the key, though, to getting the best out of your workforce. Take the time to listen to what they are saying.

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