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Legal Considerations for Incorporating EV Chargers into Your Franchise System
By Abby Risner on March 8, 2023 at 12:00 PM

Electric vehicle (EV) charging is now available at traditional motor fuel stations, as well as restaurants, parking garages, grocery chains, and banks.  With the increase of fully electric vehicles apparent in the news and on the streets and poised to grow exponentially, some franchisors are assessing incorporating EVs into their franchise systems.

At the federal and state levels, resources and guidance on EV charging are available. If you are considering whether to integrate EV charging in your franchise system, there are legal considerations to evaluate in addition to the business, finance, and technological aspects:

1. Franchise and/or Licensing and Application of State Relationship Laws. Implementing EV charging as part of a franchise system presents unique legal considerations. Do you want to control the EV charging model, or are you willing to be more flexible for each business partner to implement as they see fit? Are you interested in owning the EV charging business, or do you want to incorporate standards for franchisees that elect to add EV charging? Are you comfortable allowing all locations to incorporate EV chargers? Do you want establish limitations on how they do so? In developing answers to these questions, be sure these issues are rolled into your contracts and/or franchise disclosure document now, even if you aren’t using them yet, so you have them available when implementation is desired.

Consider whether the EV charging can be offered under the same franchise brand or whether it will have a separate mark.  You will also want to evaluate any related brand and marketing controls you need in place.  Do you have image programs that apply to the underlying business? Will the same standards apply to the EV charging, or do they need updating and adjustment?

If you are not a franchise or you are excluded or exempted from franchise laws for the other aspects of your brand but are allowing EV charging under a trademark, consider whether your business could now be subject to a franchise or other state relationship laws.

2. Ownership. You should also consider legal questions related to ownership of the EV chargers. Do your contracts clearly provide who owns the chargers? Will they be locally owned or third-party leased? If you are contracting with a utility or charging partner for supply, who is responsible for ownership, installation, operation, and maintenance?  For any lease arrangements, consider associated real estate issues.

3. General Contractual Arrangements. This is a rapidly developing industry. Ensure your contractual provisions allow flexibility to change your design and financial model as technology develops. Whether it is construction, utility supply, vendors, leasing hardware, or maintenance, you should verify that all contractual provisions allow flexibility. 

Consider the legal implications and contractual terms associated with the pricing structure: Will your EV chargers be free, pay-as-you-go, or subscription-based? Who will set the pricing?  

4. Premises liability. Evaluate legal risks and allocation related to premises liability risks associated with EV charging stations—including fire, the presence of electricity/wiring/plugs, traffic accidents, and slip and falls. Review the indemnity provisions in your franchise agreements to verify whether they need to be modified or updated.

5. Data privacy and cybersecurity risks. Are you collecting or capturing any personal or biometric information to use the charging service? Depending on how your system functions, be sure you evaluate whether you are collecting any information that could be covered by state privacy laws such as the California Consumer Privacy Act or Illinois’ Biometric Information Privacy Act. These laws are constantly changing and being adopted, so be sure to regularly check for updates in your applicable jurisdictions.  With respect to any information you are collecting for subscribers or payment, you will need to ensure you have applicable cybersecurity issues covered and potentially cybersecurity insurance.

6. Permitting, Compliance, and Developing Rules and Requirements on EVs. From your charging infrastructure to optional certifications, be sure you have evaluated local, state, and federal requirements.  These include local permits for installation as well as specific codes on charger installations.  You will also need to consider zoning to verify it does not restrict your plans.

Depending on financing sources, review other applicable rules, including the minimum standards for federally funded EV charging projects set out in the National Electric Vehicle Infrastructure Standards and Requirements, effective March 30, 2023.  For example, these requirements address the number and type of charging ports as well as payment methods. 

7. ADA considerations. Ensure compliance with the Americans with Disabilities Act requirements for accessing and using EV chargers.

8. Payment Processing and Loyalty Programs. Assess contracts and legal risks associated with the method of payment specific to the addition of EV chargers.  You may also consider whether your existing loyalty program for the franchise system applies to the EV charging, or whether a separate loyalty program will apply.

9. Legal Risks Associated with Intermingled Businesses. Will your business provide services to occupy customers for the full time it takes to charge their vehicle?  What type of charging customer do you want to service? You should assume that a customer will need to charge for at least 30 minutes and possibly much longer, so consider what space and services you have available during that time.  It may be a dining experience, well-supplied convenience store, or another activity that typically takes at least 30 minutes.  You will want to evaluate your legal risks and contractual obligations depending on the crossover nature of the services or businesses.  If you offer EV charging for free, how will you limit use to customers?

10. Insurance. Consider whether the various contracts associated with the EV charging need to incorporate insurance requirements and/or whether you need to expand your insurance coverage related to the EV charging.  If you are leaving many aspects to the discretion of franchisees, consider whether you need to modify your existing insurance requirements in your franchise agreements.

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