Latest news with #FranchiseeProtectionAct
Yahoo
15-04-2025
- Business
- Yahoo
In Utah, the law protects many franchise owners' right to close on a 'religious day'
SALT LAKE CITY, April 15 (UPI) -- When Kelly Clayton was looking for a franchise to purchase in 2019, Nothing Bundt Cakes caught his eye because the company allowed the bakeries to be closed on Sundays. That option sealed the deal for the Utah man and his family. "We would not have purchased the franchise if we would have had to be open on Sunday," said Clayton, who is a member of The Church of Jesus Christ of Latter-day Saints, formerly known as the Mormon Church. "This really fit our family values, our desire to worship on Sunday and to keep the Sabbath day holy." The optional Sunday operation also attracted Fawn and Brad Berrett, who have been with the Nothing Bundt Cakes chain for six years. The retired couple are Latter-day Saints who attend church services every week, and they told company officials when they bought a franchise they did not intend to be open on Sundays. The company was good with that, Fawn Berrett said. But last year, Roark Capital, a private equity firm that acquired Nothing Bundt Cakes in 2021, told franchisees they had to be open at least five hours on Sundays starting in February 2025. The Clayton family had bought two franchises by then, one in St. George in 2019 and the other in Spanish Fork in 2024. The Berretts bought a franchise in West Bountiful in 2019, then sold it and opened a Salt Lake City franchise in 2023. After Nothing Bundt Cakes franchise owners discussed the situation with Utah state legislators, Rep. Ken Ivory, R-West Jordan, introduced House Bill 441, the Franchisee Protection Act. The act was unanimously approved by the House of Representatives and passed by the Senate on a 23-2 vote, and Gov. Spencer Cox signed it into law March 17. Under the law, franchisors cannot require franchise owners to be open on a "religious day" when operating that day conflicts with a sincerely held religious belief unless the mandate was part of the existing agreement. In addition, a franchisor cannot mandate that a franchisee accept a religious day operation requirement as part of an amendment to an existing agreement or refuse to renew a franchise agreement based on the franchisee's decision to not comply with a religious day operation mandate. The law does not apply when the original franchise agreement "conspicuously provides" a religious day operation requirement, the franchisee agrees to the requirement through a renewal or an amendment to the agreement or the franchisor and franchisee enter an agreement expanding the number of the franchisee's locations that have a religious day operation. Civil penalties against a franchisor for violating the law are up to $10,000 for a first violation, $25,000 for a second violation within three years after the franchisee filed the complaint for the first violation and $50,000 for a third violation within five years after the first complaint was filed. In a written statement, the company said, "Nothing Bundt Cakes is committed to following all federal, state and local laws in the communities we serve. Guests can check with their local bakeries for hours of operation, and we look forward to being part of Utahns' celebrations and everyday moments for years to come." Nothing Bundt Cakes was founded in Las Vegas in 1997 by friends Dena Tripp and Debbie Shwetz. The company was sold in 2016 to Levine Leichtman Capital Partners, a private equity firm, and then sold five years later to Roark. The specialty cake company, which is based in Addison, Texas, operates in more than 600 locations. Fawn Berrett said company officials told her and her husband they could make more money if they opened their bakery on Sunday. "We said we don't care if we make $20,000 more a week just because we open on Sundays," she said. "It's literally not worth any amount of money." The company said it was just a suggestion, but six months later the Sunday mandate was issued, Berrett said. "Roark Capital is all about making money," she said. "They don't care about individual owners." Ivory said some franchise owners invested their life savings and left corporate jobs based on representations that Nothing Bundt Cakes was a family-friendly and religion-friendly organization that would allow them to be off Sundays. Now, prospective franchisees are negotiating with their eyes open, he said. "The issue is there were promises made and there were disclosures made and not made," Ivory said. "In Utah, we want to make sure that both franchisors and franchisees have full and fair disclosure when they're making business decisions, particularly about having time with family and having the opportunity to worship on the days of their choice. "It's just good, fair, open, transparent business and that's really all this bill is about." The law applies to all days of worship, Ivory said. A franchisor, for example, cannot tell franchisees after they buy a kosher deli under the expectation of being closed on Saturdays that they must begin opening that day, he said. The law applies only to Utah, but it can serve as a model to other states, Ivory said. He pointed out that Sunday is a legal holiday under Utah state code,. "There's been a great deal of attention to the bill nationally, internationally even, and the people that were being burdened and oppressed by franchisors that were frankly, in my opinion, just trying to be bullies," Ivory said. He added, "I'm just gratified to be part of the process where at the state level, when people see things that concern their life and liberty and their property, they can make changes." Clayton said his original franchise contract made Sunday operation optional and protects that option when the agreement comes up for renewal. "It was a very, very tenuous time for us and the other Utah bakeries, as well as those across the country watching what was going on, who were also fighting to stay closed on Sunday for their own religious reasons and some for financial reasons," he said. Clayton described the dispute over operating times as almost a David-and-Goliath situation. "It just was not right to try to crush the small guy," he said. "It's not only our franchise. There are other franchises that are closed on Sunday and it will protect them going forward and also create a situation where companies actually have to be explicit about what you're signing on for. "We love the Nothing Bundt Cakes brand and are grateful to be a part of such a wonderful franchise."
Yahoo
18-03-2025
- Business
- Yahoo
Gov. Cox signs Utah law letting cake shops stay closed on Sunday without penalty
Utah Gov. Spencer Cox signed a new bill into law on Monday that will allow a group of nearly two dozen Nothing Bundt Cakes stores in Utah to stay closed on Sundays without facing legal repercussions from their corporate franchisor. The stores could have faced a difficult alternative if the Legislature had failed to pass HB441, Franchisee Protection Act, which will go into effect immediately after receiving supermajority support from lawmakers. Nothing Bundt Cakes owners were notified midway through the 2025 legislative session that they had until March 7 to comply with a new rule mandating that they open for at least five hours on Sundays or risk losing their bakeries. The bill received a final unanimous vote on March 7, with just hours left in the session. 'We are so grateful for the passing of the Franchisee Protection Act,' said Kelly Clayton, the owner of Nothing Bundt Cakes locations in St. George and Spanish Fork. 'This bill not only protects us but all franchisees from unfair practices by big corporations. Most of all we owe our thanks to the Lord for helping us to maintain our right to rest, be with family and worship him on his Sabbath day.' HB441 was introduced after multiple business owners approached Rep. Ken Ivory, R-West Jordan, about a recent policy change requiring them to open on Sundays contrary to their original contract — and their religious beliefs. Ivory brought the issue to Sen. Lincoln Fillmore, R-South Jordan, who owns a Nothing Bundt Cakes franchise in Taylorsville. Fillmore answered Ivory's questions but chose not to involve himself in the bill, Ivory said. Ivory described the situation facing franchisees as having an 'an economic gun to their head' because many Nothing Bundt Cakes owners, including Clayton, had invested their life savings into opening up shops with the understanding that they could stay closed on their day of worship. Utah's new law prohibits a franchisor, like Nothing Bundt Cakes, from requiring a franchisee to open on a day of worship if it conflicts with a sincerely held religious belief, unless the original franchise agreement clearly includes the requirement. Franchisors will be allowed to renew a franchise agreement to include 'a religious day operation requirement' but they cannot refuse to renew agreements based on a franchisee's decision to not accept the religious day operation requirement. If a franchisor violates the statute, then they will be liable to pay damages to the franchisee and to pay civil penalties of up to $10,000 for the first violation, $25,000 for a second violation and $50,000 for a subsequent violation. 'There's something about that opportunity and ability and sanctity of recognizing worship that is very central to American liberty,' Ivory told the Deseret News. While there was some debate about whether the bill infringed on economic freedom, lawmakers appeared to arrive at a consensus that because franchise agreements are a creation of state code they can be amended to balance the relationship between franchisor and franchisee. Many Nothing Bundt Cakes owners reported that the reason they were attracted to the franchise in the first place was that the organization insisted that their company culture valued faith and family. But after the company was sold to a private equity firm, franchisees were notified that at the beginning of 2025 all locations must be open for 62 hours a week with a five-hour minimum on Sundays. Alyssa Morrison, who is the operator at the American Fork Nothing Bundt Cakes store, told the Deseret News that the new law will enable her family to continue balancing good customer service with their personal religious values. 'This bill begins to level the playing field so that franchisors are prevented from putting small business owner's lives and life savings at risk by making promises about their 'family culture' to entice their investments, and years later change the agreement to force franchisees to be away from their families and open their stores on their originally agreed upon day of worship,' Morrison said. Nothing Bundt Cakes' chief legal officer messaged some franchisees on March 13 stating that the company would follow the state's new law, Clayton said. In a statement to the Deseret News, Nothing Bundt Cakes reaffirmed that the company is 'committed to following all federal, state and local laws in the communities we serve.' 'Guests can check with their local bakeries for hours of operation, and we look forward to being part of Utahns' celebrations and everyday moments for years to come,' the statement said.
