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WHAT WE DO

HospitalityLawyer.com® converges legal, safety, and security solutions for the hotel, food and beverage, private club, meeting, event, and corporate travel industries.

We are a worldwide network of attorneys that focus on hospitality, travel and tourism issues; a marketing conduit for suppliers of legal, safety and security solutions to reach hospitality developers and operators in need of those solutions; we mitigate critical incidents, injuries, litigation and liability within the hospitality industry, in the U.S. and abroad by facilitating the creation, collection, and dissemination of legal, safety and security information, products and services.

WEEKLY SPOTLIGHT

Attorney of the Week
Jordan Schwartz

Jordan B. Schwartz is a partner in Conn Maciel Carey’s Washington, DC office.

Mr. Schwartz advises employers on a wide range of complex employment-related issues and advises properties regarding all aspects of compliance with the Americans with Disabilities Act (ADA). He defends employers against claims of discrimination and harassment, misappropriation of trade secrets, and wage and hour violations. He also counsels employers on all aspects of the employer-employee relationship. His practice includes the following: Title III of the ADA; Wage & Hour Law; Non-compete Agreements and Trade Secrets; Harassment and Discrimination; and Employment Counseling.

Mr. Schwartz practices across a range of different industries, and has extensive expertise in the hospitality, club, and retail industries.

Law Firm of the Week
Cozen O’Connor

Ranked among the top 100 law firms in the country, Cozen O’Connor has more than 750 attorneys in 28 cities across two continents. We are a full-service firm with nationally recognized practices in litigation, business law, and government relations, and our attorneys have experience operating in all sectors of the economy. Our diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, ambitious startups, and high-profile individuals.

In an industry built on talk, Cozen O’Connor has made its name by doing. We have built our firm one case, one victory at a time. Our attorneys have impeccable academic credentials and are able to combine intellectual rigor with practicality and efficiency. We provide sophisticated, business-minded advice aimed at one simple goal: getting the right result for our clients. No matter how complex, contentious, or critical the undertaking, we persevere until the job is done.

What you’ve built, we can defend. What you envision, we can help construct.

Company of the Week
Rimkus Consulting Group

Rimkus Consulting Group, Inc. is a US-based international consulting firm that brings more than 500 professionals to bear on your consulting and expert witness needs. Within these pages, you can learn about our company history, explore our wide range of practice areas, and view our recent assignments. Even our long-time clients are often surprised to learn the breadth of our services. You probably will be as well.

Since 1983, we have been in the forensics business, offering our clients an array of experts that spans virtually all engineering disciplines, many scientific disciplines, and forensic business analysis. This broad range of expertise together with the years of experience our staff members bring into play, enables us to address virtually any client challenge. In addition to offering our clients the services of an extensive list of seasoned professionals, we augment our full-time and part-time staff with a select group of contractors with unique education or experience to address those more esoteric needs that come up from time to time.

While You're Here:

Find lawyers, law firms and companies which focus on hotel, restaurant, and travel law, as well the duty of care owed by businesses to traveling employees in our extensive directories.

Browse our resources for articles and white papers, access training and downloadable forms and solutions to assist in mitigating liability, and check out our groundbreaking conferences for intensive education, exceptional networking, and unequaled crisis management training.

Subscribe to our CONVERGE Blog and Newsletter for valuable insights from hospitality and travel risk management experts. Our blog features exclusive content from our contributors, who collectively represent the full spectrum of hospitality law, risk management and comprehensive duty of care solutions.

FROM OUR CONVERGE BLOG
Our CONVERGE BLOG focuses on legal, safety, and security challenges for Hospitality, Travel, Travel Vendors and Corporate Travel Buyers as individuals and businesses.
Our blog features exclusive content from our contributors, who collectively represent the full spectrum of hospitality law, risk management and comprehensive duty of care solutions.

How Should Your Business Handle Anti-Mask Guests? A 5-Step Action Plan

As an increasing number of businesses begin to require face coverings in their facilities – whether as a result of a local legal mandate or in the interest of public safety – there has been a corresponding increase in the number of well-publicized reports of customers and guests reacting in a belligerent, hostile, or even violent manner after being asked to comply with mask rules. What should your business do to minimize the chances of such an incident occurring in your workplace, and what should you do if an anti-mask guest disrupts your business? Here is a five-step plan to address this unfortunate part of our new reality.

Step One: Understand That You Are Permitted To Require Employees And Visitors To Wear Cloth Face Coverings Or Masks

While many jurisdictions already require that businesses have their employees and any members of the public who enter their facilities wear masks, you may be wondering whether you can require masks if your jurisdiction does not have such a mandate in place. The answer is simple. As a private business, you can decide whether you allow customers or visitors onto your property if they are not wearing a mask. This is similar to the “no shirt, no shoes, no service” policy that you commonly see at businesses.

The Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) recommend the use of face masks or cloth face coverings as part of a comprehensive plan to help slow the spread of COVID-19. Face masks should be worn when employees or visitors will interact with other people. They are not the only method, but they are one of the strategies recommended by experts to slow the spread of COVID-19.

CDC guidance provides several exemptions indicating who should not wear masks: “Cloth face coverings should not be placed on young children younger than two years of age, anyone who has trouble breathing, or is unconscious, incapacitated or otherwise unable to remove the cover without assistance.” And although you may have a policy or be subject to a state or local obligation to require facemasks, you may also have an obligation to accommodate the individual if doing so is possible. Taking a few precautions as outlined below will allow you to refuse entry to customers without masks.

Step Two: Be Proactive With Your Mask Policy

Providing notice to customers, visitors, and guests of your mask requirement prior to their arrival at your business can help reduce confusion and prevent an uncomfortable situation. Personal service providers (such as spas and salons) and hospitality businesses (such as hotels and restaurants) should provide notice of your policy when confirming reservations. A simple message to visitors and guests is best, not only confirming the reservation but highlighting your efforts to keep them and your staff safe by sharing your social distancing and masks requirements. Posting notices on your public facing website, apps, and social media platforms to notify visitors of your policy is recommended; you can also use emails or texts as additional communication tools.

You should post conspicuous signs in prominent places at your entrances. The notices should include a statement that you have the right to refuse entry or service to anyone not complying with the requirement, particularly where required by local law. Many jurisdictions, in fact, already require such signage. 

Consider having a staff member stationed at the entrance to remind guests of your requirement. Many businesses, such as retailers, hotels, and restaurants, have taken their policy a step further to offer masks to visitors when they enter. For hotel guests who will be staying for extended periods, have guests sign an acknowledgement of the policy with an agreement to adhere to it. Be specific about consequences – tell guests that they will be asked to put a mask on if they are discovered without one and asked to leave the property if they refuse to comply. 

Step Three: Train Your Staff

Your staff will be more likely to effectively enforce your requirement for masks if they understand why you have the requirement. Train your employees on all health and safety measures you are implementing, including the face mask requirement, and the reasons why you are implementing these measures. You should emphasize that these measures are for their protection as well as the protection of others that they interact with.

Educate your employees about your state or local government requirements so they understand what is required and what is not. Additionally, because both OSHA and the CDC have included masks in their respective recommendations and guidance, requiring masks for both employees and visitors could help avoid an OSHA General Duty Citation or similar challenge by local health and safety authorities.

It is also crucial to train your visitor and customer-facing employees on how to politely request them to wear a mask. For example, consider something like “Our policy is to require all visitors to wear a mask. Can I provide one to you?” If the guest refuses, communicate a clear procedure to your employees for how to address this unfortunate situation (Step Five provides suggestions).

Step Four: Reasonably Accommodate Visitors If They Have A Medical Condition

Visitors may refuse to wear a mask claiming they have an underlying health condition that prevents them from doing so. Although an individual may have a condition that makes it difficult to wear a mask (e.g., a pulmonary condition), it is highly unlikely the person is carrying a doctor’s note to that effect. Further, some state public health orders prohibit you from requiring medical documentation when this type of exemption is claimed. For these reasons, it is best not to require documentation from a visitor to support their request.

Even though you may have a policy or are subject to a state-ordered obligation to require facemasks, you may also have an obligation to accommodate the individual if doing so is possible. Instead of engaging in a discussion with the customer or guest about whether they are exempt from your rule, consider whether you can offer an accommodation that would allow them to either access your business or your products/services. Some examples could include curbside service, online shopping for products, or by letting them know they can enter your business at another time. You could also look into other alternatives that would not inhibit breathing, such as requiring your guests to wear a full clear face shield.   

However, it is important to recognize that accommodation recommendations are based on highly fact-specific analyses that need to take into account the medical condition of the guest, the type of business you are conducting, and any specific state or local laws that present additional requirements (or punish offending businesses with stiff monetary penalties). You will want to coordinate with legal counsel for clarity regarding general or specific situations that may arise at your place of business.

What if a visitor doesn’t say they have a medical issue but instead presents a card or literature indicating that masks are unsafe? Social or political objections do not allow customers to refuse to wear masks. However, rather than engage in confrontations, it is best to remind a visitor of your rule and offer alternatives for how to access your business.  

Step Five: Delicately Deal With Visitors Who Refuse To Comply

If you’ve taken all of the steps above and you still have a visitor who refuses to comply, what do you do? A clear policy and training is key. Share the exact phrase you want your employees to use when dealing with an anti-mask guest, such as “If you will not wear the mask per our policy, I have been instructed to contact my manager who will need to discuss this with you.” If your front-line employee is unable to coax your guests or customers to comply, you should have a designated manager to handle the removal of a visitor. Do not ask or expect a non-management employee to handle removal of a non-compliant visitor, guest, or customer. Instead, encourage them to immediately involve a manager.

That manager will need guidance on what your business wants to do if a guest or visitor becomes belligerent. The first step in such an unfortunate situation should be for the manager to meet the guest in a private location, share your policy, and, if applicable, the local/state ordinance or any acknowledgement the guest may have signed upon arrival or at the time of reservation.

The manager should inform your visitor that they will be asked to leave if they continue to refuse to comply. If the guest does not cooperate, your manager should escort the individual to the exit and inform them that they are welcome to return if they comply with the policy or when the need for a mask is gone. Where applicable, your manager should offer to reschedule an appointment or reservation.

It is always wise for your manager to avoid raising their voice and to refrain from physical contact. If the situation escalates, your manager should know to call on your own security personnel or local authorities in the same manner you would handle a trespassing situation. Regardless of how the situation concludes, your manager should immediately document the incident in objective, non-emotional terms. They should be instructed to provide the documentation to key personnel (human resources, legal, etc.) as soon as possible, and your business should retain the report in the event you are required to later demonstrate what happened.

Conclusion

Fisher Phillips will continue to monitor the rapidly developing COVID-19 situation and provide updates as appropriate. Make sure you are subscribed to Fisher Phillips’ Alert System to get the most up-to-date information. For further information, contact your Fisher Phillips attorney or any member of our Post-Pandemic Strategy Group Roster. You can also review our FP BEYOND THE CURVE: Post-Pandemic Back-To-Business FAQs For Employers and our FP Resource Center For Employers.


This Legal Alert provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact situation.


AUTHORS

Myra Creighton, Partner
Myra Creighton is a partner in the firm’s Atlanta office. Her practice focuses on advising clients concerning their obligations to employees under the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA), ensuring their policies and procedures are consistent with both these laws and defending clients against employee claims alleging violations of the ADA and FMLA.

Aymara Ledezma, Associate
Aymara Ledezma is an associate in the firm’s Los Angeles office. She represents employers in all aspects of labor and employment law, including matters involving wage and hour issues, allegations of discrimination and harassment, and wrongful discharge. Aymara also assists employers in their efforts to comply with state and federal law, advising them on wage and hour law, exemption status, meal and rest break policy, harassment training, termination steps, and reasonable accommodations, among other employment issues.

Todd Logsdon, Partner
Todd Logsdon is a partner in the firm’s Louisville office and co-chair of the firm’s Workplace Safety and Catastrophe Practice Group. His practice is devoted to advising and representing employers regarding labor and employment law matters.

Richard Meneghello, Partner
Rich Meneghello is probably writing something as you’re reading this. As the firm’s Senior Director of Content, Rich focuses much of his time developing legal alerts, web articles, newsletter features, and blog posts for the Fisher Phillips website – in fact, he has published more than 225 such pieces in the last two years alone, and has edited hundreds of others written by the firm’s wide collection of talented writers.

Catharine Morisset, Partner
Catharine Morisset is a litigation partner in the firm’s Seattle office, representing local and national employers in litigation in state and federal courts, on appeal, and also before the EEOC and similar state agencies in all aspects of workplace law, such as the ADA, ADEA, FLSA, FMLA, FCRA, NLRA, Title VII, UTSA, and similar state laws. From the outset, Catharine works with clients to develop a strategy that leads to successful resolutions, whether it is a meticulous plaintiff’s deposition, motion to dismiss, favorable mediation, or trial success.

Andria Ryan, Partner
Andria Ryan is a partner in the Atlanta office and she serves as the chair of the firm’s Hospitality Practice Group and co-chair of the Hospitality Industry Group. She represents employers in virtually every area of employment and labor law. Andria represents employers throughout the United States in defending employment discrimination and harassment cases as well as handling traditional labor matters such as unfair labor practices and union campaigns.

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Are You Data-Ready for Duty of Care?

As companies prepare to restart their corporate travel programs, duty of care is at the forefront of all planning exercises. But as Timothy Manrow put it recently in his Converge blog post, “open for business does not automatically equate to safe for business” — so how can travel and risk management teams ensure the safety of their traveling employees in this rapidly evolving new environment?

It starts with data. 

A truly comprehensive risk management solution requires definitive, timely, actionable detail on each and every travel segment of each and every business trip. It does no good to only capture the flight itinerary details; if you are missing the hotel portion of the trip, you have no way to evaluate the safety of that location, reach your employee in the event of an emergency, or conduct proper contact tracing if that hotel turns out to be impacted by Covid-19.

Most risk management teams rely on their counterparts within the corporate travel organization to provide them with the relevant itinerary data for employee business trips. Typically this data comes via feeds from the company’s travel management company (TMC) which send through all the flight, hotel, and car rental bookings made via the company’s mandated online booking tool (OBT) or corporate agency.

However, what many risk management professionals may not realize is that this TMC data is incomplete, missing any bookings that employees make outside of the OBT or TMC environment, including those bookings made:

  • directly on airline, hotel, rail, or car rental websites or mobile apps
  • via online travel agencies like Expedia, Bookings.com, Hotwire, etc.
  • conference and meeting bookings made through a third party event booking tool
  • at the front desk of the hotel or the ticketing counter at the airport or rail station

There are countless reasons for this data “leakage” resulting from off-channel bookings, even in travel programs with strong mandates and compliance rules. In fact, the industry average rate for these bookings is ~40% — meaning, if your risk management program is dependent solely on TMC data feeds, you are likely missing ~40% of employee business trips. 

This means you have major blind spots in the provision of duty of care — missing the opportunity to alert travelers to risks at their destination or rapidly assist them in an emergency.

And in an environment where missing even one booking can have catastrophic repercussions for the employee, their colleagues, and their family, that risk is unacceptable, both financially and morally.

Conversely, firms that employ an omnichannel approach to their data strategy for travel risk management give their teams the best chance at avoiding catastrophe. Rather than try to force corporate travel bookings into a single channel (e.g., their corporate booking tool or agency), they recognize that bookings will occur across a range of channels, and they design their data strategy to accommodate them.

So where should risk management teams start to ensure they are truly data-ready for duty of care?

  1. Audit your company’s existing travel booking activity to determine where the gaps are occurring. Automated data aggregation tools can be easily deployed to detect off-channel travel bookings so you can identify the most common sites and apps employees use to book trips when they bypass company tools.

  2. Identify the additional data channels to put into place to capture these non-TMC bookings for a true omnichannel data strategy. Many of the same data aggregation tools noted above can help here as well. What definitely DOESN’T work: mandates. Most of you reading this have had program mandates all along, yet you’re still dealing with blind spots. Exceptions are the rule — so plan for them.

  3. Educate and communicate. Enlist your fellow stakeholders in an education campaign to explain to employees WHY timely and accurate itinerary information is critical, and communicate policies and protocols that ensure your employees are engaged as part of your data collection strategy.

The best data strategy is one that optimizes for risk management instead of incident management. Make this possible for your firm by encouraging an omnichannel approach to your travel program’s data strategy.

Join Matt Griffin at the 5th Annual Global Travel Risk Summit, sponsored by HospitalityLawyer.com and the BTN Group, July 29, 2020

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Branded Residence in Egypt Legal Framework

  1. Introduction

Egypt’s real estate market has been witnessing a great development during the last few years. New types of investment are increasingly evolving; among them is the branded residence associated with rental pool arrangements. In this type of investment, a luxury brand name of a hotel is licensed for use on a residential development. The hotel operator collaborates with the developer to provide full range of hospitality services and activities.

A residential development will consist of branded fully furnished units (“Units”). Units sold to private investors (“Owner”) will be managed by the brand operator (“Operator”) as serviced units to the extent and as long as these are kept in the rental pool. Another part of the Units can remain owned by the developer of the project (the “Developer”) to form a guaranteed number of Units for the management of Operator regardless of the rental pool.

The concept of ‘branded residence’ will raise several legal questions; among them the legal nature of the branded residence and whether it will be considered a hospitality or hotel facility.

Branded residence scheme has several
advantages for all stakeholders.

The Operator will usually have two main concerns: first, how to ensure control over the operation and maintain the ‘branded residence’ up to the brand standards; and second, how to avoid direct legal relations with the multiple Units. The Operator will therefore be keen to retain the Developer as owner of various shared facilities and common areas of the branded residence component as well as to have the Developer as a contracting party with the Owners or any Owners’ union.

The concept of ‘branded residence’ will raise several legal questions; among them the legal nature of the branded residence and whether it will be considered a hospitality or hotel facility.

Another question to consider is the common property (strata) title and management rules under Egyptian law and the role of the owners’ union in this respect.  Also, how the contractual arrangements and legal documentations can be structured to accommodate the interests of the different stakeholders. This Article will try to answer these questions briefly.

Branded residence takes several forms. It may have a hotel component (hotel + branded residence) or standalone. In this article we will be focusing on the stand alone projects.

2. Does Branded Residence Fall into the Hospitality Class?

The concept of a branded residence is relatively new in Egypt and it is therefore not subject to specific regulations. A legal framework for the concept however can be created under the general rules of contract, the real estate and hospitality laws and regulations.

Hospitality and hotel facility ownership and operation is a highly regulated area in Egypt. According to the Hotel and Touristic Facilities Law No. 1 for 1973, a hotel facility may not be established, constructed, used, marketed or managed without obtaining a license from the Ministry of Tourism (“MOT”) as the competent regulator.

A hotel facility is defined in the law to include hotels, pension, and villages, floating hotels, cruise ships as well as houses and furnished apartments which are permanently allocated for the residence of tourists. The law however does not define the term ‘tourist’ nor does it clarify the criteria for a ‘permanent allocation’ or its minimum duration.

There is a possibility therefore that a ‘branded residence’ be considered as comprising furnished apartments that are allocated for tourists and therefore constitutes a hotel facility. In this case, the residences will not be established without a license from the MOT, and their management must be through a licensed company.

The current interpretation of the regulatory authorities is that a license from the MOT will be required only if the branded residences consist of a hotel component and branded units (Hotel + branded residence). The license in this case will be limited to the establishment and management of the hotel rather than the associated branded units which will be established and managed as non-hotel units and will not fall under the authority of the MOT.

3. Common property (strata) title under Egyptian Law

The terminology ‘strata’ is referring to individual ownership of part of a property (generally an apartment or a house), combined with shared ownership in the remainder common areas (e.g. foyers, driveways, stairs and gardens).

The Egyptian Civil Code (the “Civil Code”) contains detailed rules governing common/shared ownership as well as the management thereof. The rules under the Civil Code are applicable on all kinds properties whatever its purpose, i.e., residential and non-residential.

Management of the common property is bestowed on all co-owners collectively. Decisions related to the management of a common property shall be taken by the majority vote of the co-owners, and a decision of the majority will be obligatory to all owners in this case.

Majority co-owners shall have the right to appoint a manager for the common property and to set rules for the management and efficient use of the common property. The maintenance and management costs as well as the taxes on the common property will be borne by all co-owners pro-rata with their ownership percentage.

Occupant Union

In addition to the general rules for management of common ownership under the Civil Code, the Building Law No. 119 for 2008 (“Building Law”) contains detailed provision governing owners associations. The Building Law applies on residential as well as commercial and administrative properties. It however does not apply to tourists or hotel facilities.

According to the Building Law, a building, a development or a gated compound (the “Development”) which consist of 5 units or more are mandatorily required to establish a union for the occupants (the “Union”). 

The Union is responsible for the management, maintenance, safety and use of the Development including the shared parts and facilities. It is also responsible for ensuring the restoration of the Development, keeping its architectural design and providing the required services thereto.

For integrated residential compounds, the Union is required to take the form of a company. The owners of the Units in the compound will coordinate with the Developer to establish the company. Each owner will pay a share in the company’s capital equal to the percentage of the area of unit to the total area of the compound.

The Union will have a general assembly consisting of all owners/tenants of the Units. The general assembly will appoint a board of directors for the daily management of the Development.

Each unit will have a vote in the general assembly calculated on the basis of the percentage of the area of the unit to the total area of the Development. The area of the unit which is allocated for commercial and administrated use shall have double the vote of the residential unit.

4. Branded Residence Legal Documentation

How to preserve the Operator’s right to operate and manage the Units

The unit sale agreement between the Developer and the buyer of the Unit may include a management statement committing the buyer to engage the Operator to manage the residences and the common areas and impose rules and regulations governing the use of the Units and the behavior by the Owners.

The Operator’s right to operate and manage the Units can also is ensured through a residence management agreement with the Developer and/or the Union whereby the Operator is engaged to manage the common areas and shared facilities.

In a rental program agreement with the Owners who opt for the rental scheme, the Owners can delegate the Developer to act as a tenant on their behalf. An acknowledgement by the Owner that the operator will be the branded operator of its Unit should be clearly stated in such rental agreement.

How to maintain control over shared facilities

The Unit Sale Agreement can provide clearly that title on the common areas will be with the Developer. In this way, shared facilities (like spa, gym, pool etc.) will remain under the control of the Developer.

The diagram below provides an illustrative example of the main contractual relations and contractual documents that one can see in a branded residence project, although this can vary depending on each deployed scheme.

How to deal with multiple participants in the rental pool structure

The Developer can act as intermediary between the Owners, the Union and the Operator through the following contractual structure:

  • Developer will be a tenant of the Unit kept in the rental pool, and will be voting on behalf of the Owner at the general assembly of the Union.
  • The Developer (or its representative) will be appointed as the Union’s Chairman to manage the day-to-day aspects of the Development and the common areas and facilities.
  • The Union, which should be controlled by the Developer, will contract the Operator as the manager of the Development.

The Operator may also agree with the Developer to keep the ownership of a particular number of Units in the Development as a guaranteed source for the Operator’s business in future, regardless of the rental pool.

How to preserve the branded unit in the rental pool

In order to protect the Operator right, a rental agreement shall be entered into with the Owner. A requirement that the Owner remain in the ‘rental pool’ for a period of time is generally legal and enforceable as long as it is for a fixed term and not eternal. There is no maximum duration that is mandated by the law. Withdrawal from the rental arrangement by the Owner during the agreed term can constitute a breach of contract. The rental pooling agreement can include a termination fee (liquidated damages) that will be payable by the Owner in case of withdrawal from the rental pool

Generally speaking, it is essential to agree on a transparent and equitable allocation of the cost and expenses attributable to the Units as well as the profit distribution in order to incentivize the Owner to continue in the rental pooling scheme.

Protection of the brand

Protection of the Operator’s brand can be ensured through contractual arrangements between the parties. A Marketing and Licensing Agreement will be entered into between the Developer and the Operator whereby the Operator agrees to license the use of its brand and marks to the Developer in connection with the marketing and sales of the Units against a license fee. This agreement will provide that the use of the brand is solely limited to the marketing and sales of the Units.

The unit sale agreement between the Developer and the buyer can provide, among others that the Owner or the Union is restricted from appointing an operator for management of the Unit which is the Operator’s competitor to create competition to the Operator by renting out the Unit for short periods.

Loss of brand and the right of termination and exit

In case of the loss of the brand for reasons not attributable to the actions of the Owner, claims may arise by the Owner who was marketed and purchased the Unit as a branded luxury residence at a considerable premium. The Owner can argue that it has reasonable expectations that the brand and the brand service standards will remain with the Unit and be available for future resale.

To mitigate this risk, agreements should include acknowledgement by the Owner of any potential loss that may result from losing the brand as well as a waiver of claim for loss or damages against the Operator in this case. Owners can also acknowledge that the Operator may terminate the association with the Development at any time and without the consent of the Owners.

A cross-default clauses in the Marketing and Licensing Agreement, the Unit Sale Agreement and the Common Facilities Management Agreement that a loss of the brand’s association with the Development will automatically results in termination of any rights to use the brand with the Units.


If you have any questions regarding this paper, feel free to contact

Dr. Fatma Salah
Partner
Tel: +202 37488521
Email: f.salah@riad-riad.com

.

Mohamed Abdelaty
Associate
Tel: Tel: +202 37488521
Email: m.abdelaty@riad-riad.com

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TTB Clarifies Trade Practice Enforcement for COVID-19-Related Activities

The Federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) published a May 8, 2020 Industry Circular #2020-3 titled, “Trade Practice Enforcement During COVID-19 Pandemic”, which provides helpful insight into the agency’s current stance on various trade practice issues during the COVID-19 pandemic.

The Industry Circular addresses five main categories of activity:

  1. Product Returns;
  2. Extension of Credit Terms;
  3. Furnishing Gift Cards to Consumers;
  4. Donations to Charities that Support Alcohol Beverage Retailers and Their Employees; and
  5. Hand Sanitizer.

Product Returns

TTB reinforces the position it initially announced in its March 13, 2020 newsletter, lifting the general prohibition against consignment sales by allowing returns of alcohol beverage products under two different scenarios:

  1. Return of alcohol beverages purchased to sell during events that were subsequently cancelled due to COVID-19; and
  2. Return of alcohol beverages by wholesalers and retailers who have closed or “substantially reduced operations” due to COVID-19.

Returns can be made for cash or credit against outstanding indebtedness as long as the original sale was not made with the privilege of return. However, the selling manufacturing or wholesaler is under no obligation to accept returns. 

Extension of Credit Terms

In light of state-level mandated closures for alcohol beverage retailers, TTB is raising the time limit on wholesaler credit extensions from the 30-day limit set forth in See 27 CFR 6.21(f) and 27 CFR 6.65 to a new 120-day limit. TTB makes it clear, however, consignment sales are still prohibited.

Extension of Credit Terms

In light of state-level mandated closures for alcohol beverage retailers, TTB is raising the time limit on wholesaler credit extensions from the 30-day limit set forth in See 27 CFR 6.21(f) and 27 CFR 6.65 to a new 120-day limit. TTB makes it clear, however, consignment sales are still prohibited.

Furnishing Gift Cards to Consumer

TTB’s advisory addresses consumer-focused charitable/relief efforts subsidized by alcohol beverage manufacturers or wholesalers, allowing these industry members to purchase pre-paid gifts cards for people in need so long as the gift cards are not tied to a particular alcohol beverage retailer, retailer group, or restaurant. This means a manufacturer could not buy $30,000 worth of gift cards redeemable only at the top restaurant selling its brands, and hand those cards out to consumers in need. However, the manufacturer could buy $30,000 worth of Visa gift cards and merely suggest (instead of mandate) the card-holders use the cards at a particular restaurant. In any event, the manufacturer or wholesaler is still prohibited from giving the gift cards to wholesaler and retailer officers, employees, or representatives.

Donations to Charities that Support Alcohol Beverage Retailers and Their Employees

Similar to the guidance provided regarding gift cards, the Industry Circular clarifies manufacturers and wholesalers cannot provide monetary donations to alcohol beverage retailers or their employees  directly.  However, TTB states it “will not initiate investigations” relating to donations to charities that support retailers or their employees during the effective period of this Industry Circular.   Of course, those donations cannot be a “quid pro quo,” or in other words “conditioned” on purchases of, or shelf space for, the industry member’s products.

Hand Sanitizer

The Industry Circular further clarifies alcohol beverage manufacturers and wholesalers are allowed to sell or donate hand sanitizer to consumers without violating trade practice laws, and also allows combo packs containing both beverage and non-beverage items like hand sanitizer.

Note the May 8th Industry Circular is only in effect from March 1, 2020 through September 30, 2020, with the possibility for extension as TTB may deem appropriate.


If you have any questions about the above, please do not hesitate to reach out to our Nationwide Alcohol Beverage Practice Group.

Download/print the full article here.

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