Volume 19
Volume 19.1
Multi-Unit Franchising: Alternative Approaches to Protect Vulnerable Franchises
Robert W. Emerson & Jason R. Parnell
Multi-unit franchising is growing rapidly in the United States. This increase in multi-unit franchising over more traditional single-unit franchising models calls for new regulations to protect franchisees choosing to embark upon a multi-unit franchise arrangement. The United States, however, has not recognized the special circumstances of multi-unit franchisees face when opening multiple franchises. As a result, U.S. regulations fail to provide enough protection for prospective multi-unit franchisees, whether sophisticated or unsophisticated.
This Article focuses on the advantages of switching to a multi-unit franchising model and the benefits of a multi-unit business from the perspectives of both franchisors and franchisees. Next, this Article analyzes the lack of protection the United States provides to multi-unit analyzes the lack of protection the United States provides to multi-unit franchisees. This lack of protection is based on the mistaken belief that analyzes the lack of protection the United States provides to multi-unit franchisees. This lack of protection is based on the mistaken belief that most multi-unit franchisees are sophisticated and on an equal playing field with franchisors. Finally, this Article discusses solutions to the problems associated with multi-unit franchising by examining how upgraded disclosures, enhanced regulation of development schedules, and extensive guidance from other nations’ laws would better protect multi-unit franchisees and, in general, improve franchising overall.
Disney v. Democracy?: A Public Choice and Good Governance Analysis of Florida’s Reedy Creek Improvement Act of 1967 and Its Resulting Regime
Donald J. Kochan
The Reedy Creek Improvement Act of 1967 [hereinafter “1967 Act”], by all accounts is an extraordinary piece of legislation, designed principally to serve the private interests of a private corporation and its operation of Walt Disney World. This Article concludes that the 1967 Act, the political environment surrounding its creation and the maintenance of authorities under the Act, and governance pursuant to the Act have all accomplished a dangerous relaxation of normal limits on governmental power and structures of democratic accountability. In its analysis, this Article brings scholarly insights to bear upon the inquiry from constitutional law, statutory interpretation, democratic governance and institutional analysis from law and political science, land use planning, local government law, urban planning, administrative law and regulatory policy, and the interdisciplinary work animating positive political theory (explaining how politics actually works rather than how we wished it worked).
In particular, the insights from public choice theory are applied to the 1967 Act, the Reedy Creek Improvement District (RCID), and Disney for the first time in any substantial way as a matter of academic inquiry. As part of its work, the Article identifies the types of “masks” that Disney has used to obscure the private nature of the legislative deals it has profited from by attempting to clothe the 1967 Act and RCID authority in public interest-sounding frames. This Article also explores the scholarly literature explaining why agencies with single-industry-enhancing purposes or a single- or primary-entity constituency, like the RCID, tend to be captured by entities they govern.
Ordinary institutional design and limits, democratic accountability mechanisms, and constitutionally-grounded processes of good governance serve important purposes. They exist to ensure that government powers remain limited, democratic principles remain protected, citizens remain empowered, and powerful interest groups like Disney are thwarted from capturing the strong arm of the state to advance their private purposes. Indeed, the preservation of these principles of limited government and the rule of law requires erecting and respecting hurdles to government intervention to: (1) ensure that government interference in private affairs is restricted to actions that serve the public interest and are truly necessary as to justify such public intervention; and (2) maximize the space for private ordering and market competition free of special privileges, so that economic freedom, competition, innovation, and growth may flourish. Consequently, governance is intentionally difficult and time consuming, allowing for broad public participation and scrutiny that leads to optimal decisionmaking, including balancing competing interests and recognizing that the neutrality principle grounding good governance prohibits picking favorites. Legislation that sets a framework risking the relaxation of these norms should be re-evaluated.
Investigating Indebtedness: Rational Changes or Boilerplate Happenstance?
Rishabh Sharma
The terms of sovereign bond contracts—and consequently, the approximately $64 trillion sovereign debt market—hinge on the concept of Indebtedness. Indebtedness, and how it is defined, impacts the interpretation of key provisions in sovereign bond contracts. As such, it can serve as either a shield or sword for either party. But there is just one problem: no one knows what Indebtedness looks like in practice. Yet the term is too crucial of a crucible to be left nebulous and neglected. Additionally, it is imperative to determine if the vast definitional changes are products of rational calculus or boilerplate happenstance. In this paper, I analyze how the term has appeared in practice for ten countries, across seventy-five sales documents, and spanning five decades to determine a) how different countries have defined the term and b) how the definition has evolved over time. While 84 percent of the sales documents I examined define Indebtedness, 16 percent oddly use the term without defining it or make no reference to Indebtedness. Further, most of the documents that do refer to or define Indebtedness use other terms instead of their variant of Indebtedness in the pari passu, negative pledge, and cross-default clauses. Additionally, 57 percent of documents that do define Indebtedness use a broad definition rather than tailoring the term narrowly to exclude obligations. Despite these seeming confusions and apparent inconsistencies, I conclude the changes reflect intentional and rational maneuvers.
Volume 19.2
Nevadaware Divergence in Corporate Law
Wendy Gerwick Couture
The differences between Nevada and Delaware corporate law—which I call “Nevadaware divergence”—are the subject of media attention, scholarly critique, and current litigation. Nevada corporate law has a reputation as being a no-liability zone where officers and directors are free to defraud stockholders without consequences. My goal in this article is to inform a more fulsome understanding of Nevada corporate law, both substantively and theoretically, as compared to Delaware corporate law. Starting with the premise that Nevada corporate law is more nuanced than common wisdom suggests, I highlight Nevadaware divergence—not only about substantive corporate law—but also about each state’s balance of the competing policies underlying corporate law. I explore the ebb and flow of the relationship between Nevada and Delaware corporate law, from the days of copycat-ism to the current era of Nevadaware divergence, and I deeply analyze three areas in which Nevada and Delaware corporate law diverge: exculpation, appraisal, and freeze-out mergers. Based on my analysis, I assert several new perspectives about Nevadaware divergence on substantive corporate law, including the controversial argument that breaches of the duty to act in good faith are not exculpated in Nevada. Drawing from Nevada and Delaware’s different choices about the appropriate balance of the competing policies underlying corporate law, I also offer a broader perspective on the policies underpinning Nevada corporate law. In short, across the board, Nevada—to a greater degree than Delaware—prioritizes the policy goals of minimizing the negative impacts of potential monetary liability on officers and directors (such as disincentivizing qualified individuals from serving or making risky decisions) over the competing policy goals of deterring breaches of fiduciary duty, compensating stockholders and corporations for fiduciaries’ breaches, and incentivizing minority-stockholder protections.
The SEC’s (Ill-Fated) Stock Repurchase Transparency Reform: A Missed Opportunity for Investor Protection
Lynn Bai
In May 2023, the SEC adopted new transparency measures designed to improve oversight of corporate stock buybacks. However, the new regulation faced immediate and successful challenges in court, prompting the agency to suspend its implementation in November 2023 for further cost-benefit analysis. Critics contended that the new regulation would offer minimal additional benefit to investors given the current regulatory framework. Despite this legal setback, advocates for the re-proposal of the regulation persist. This article shows that the new regulation would open new avenues of legal recourse for investors, fortify their claims that might otherwise be dismissed, and unlock corporate records for inspection that were previously inaccessible. The new regulation would enhance investor protection and market integrity.
The Curious Case of Reverse Morris Trusts
Mira Ganor
This Article analyzes the Reverse Morris Trust (RMT) transaction and shows that RMTs present a unique case of corporate governance. In an RMT the shareholders are positioned on both sides of the transaction while management is not, thus creating a misalignment of interests, which can be detrimental to the shareholders and potentially lead to inefficient transactions. This Article shows that the common use of a split-off as part of the RMT transaction can benefit informed shareholders at the expense of unsophisticated shareholders. To address these concerns, this Article puts forward a proposed amendment to the tender offer rules—a default contingent tender rule.
Public-Private Coordination for Climate Solutions: Integrated Resource Planning as a Tool for Decarbonization
Bryce Campanelli
The electricity sector accounts for twenty-five percent of United States greenhouse gas emissions but has been slow to decarbonize generation assets. As companies across economic sectors look to reduce their carbon footprints and take part in the energy transition, many questions have arisen related to the proper role of government involvement. This note attempts to illuminate the way public-private partnership can spur planning, and eventual energy transition deployment, by analyzing an understudied, and frequently underappreciated, planning document deployed across the states in the electricity sector: Integrated Resource Plans (IRPs). These utility-driven, government-reviewed planning documents have been in place for decades and feature coordination between utilities and regulators to develop plans ensuring the electricity system is developing in a manner that is reliable, keeps costs low, and, increasingly, ensures that generation is decarbonized. This note aims to illuminate the current IRP landscape by examining the legal features underpinning its current implementation and categorizing the features of state IRPs that can successfully act as tools in the effort to both decarbonize the electricity sector and stand as examples for the public-private partnership that will likely be necessary to usher in a fully decarbonized society and ensure ESG is not just a marketing stunt, but something that companies are held responsible for deploying.
Volume 19.3
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