FRANCHISE & DISTRIBUTION LAW

Our Franchise and Distribution team is comprised of experienced attorneys who have a thorough knowledge of complex state and federal laws and regulations governing franchises. Our attorneys have gained a wealth of knowledge representing both franchisor and franchisees in transactional, litigation, and general counsel matters throughout the United States, allowing us to provide added value to our clients.

We are able to draw upon the support and experience AXS LAW attorneys in the Firm’s various other practice areas, including corporate, real estate, commercial litigation, and mergers and acquisitions in order to provide core interdisciplinary counsel to our clients. This in turn, helps us maximize the value and experience provided to our franchise and distribution clients. Our collaborative approach provides a convenient, cost-effective point of access for our clients to appropriate counsel for each stage of their business development, from system launch to international expansion to seamless exist, and everything in between.

Our lawyers counsel businesses on the full spectrum of product distribution methods and services and provide comprehensive legal advice to franchisors, franchisees, licensors, licensees, dealers, distributors, and sales representatives in a wide range of industries, such as food and beverage, hotels and resorts, automotive, cleaning, health care, fitness facilities, salons and spas, education and child development, automotive, and many others. In addition, our attorneys have participated as speakers at legal seminars and have authored articles in national journal publications on franchising topics.

Start Up Franchisors and Alternative Distribution Models

Successful companies who have a proven or unique concept will often consider expansion through franchising. However, when making the preparations to enter the franchise market, it is critical to obtain experienced legal counsel to provide guidance in complying with complex U.S. franchise laws and regulations, structuring the business venture to meet the requirements of law and the goals of the business, and managing the issues that will frequently arise throughout the process.   It is critical to hire an experienced franchise lawyer to prepare your franchise documents, as it often costs more to correct a poorly drafted set of documents than it does to create a legally sound set of documents from the start.

We assist start-up franchisors with:

  • Analyzing and structuring franchise programs and non-franchising licensing alternatives;
  • Planning and structuring your business and expansion plans;
  • Preparing your Franchise Disclosure Document (FDD), franchise agreement, and other franchise related documents
  • State and federal franchise registrations
  • Franchise sales compliance counseling
  • Protecting your intellectual property and brand identity
  • Developing uniform system standard and policies to enforce those standards
  • Drafting and negotiating third party vendor contracts

While franchising can be lucrative, we also recognize that franchising may not the most effective structure for business expansion, and a license, distributorship, or some other model may be better suited.  We are experienced in assisting clients with these alternative distribution models and can help clients avoid the legal pitfalls which might result from a license/distributorship later being found to be an “accidental franchise.”

Because franchising in the United States is regulated at both the federal and state levels, it is imperative for a business considering expansion to determine whether its business arrangement constitutes a “franchise” and, if it does, to comply with all applicable federal and state laws. It is critical to remember that it is irrelevant what a contract or relationship is actually called by the parties or how a contract is titled.  Indeed, the law will look at substance over form, and if a “license agreement” or “joint venture agreement” otherwise meets the legal elements of a franchise, the relationship will be deemed a franchise in the eyes of the law.  Experienced and competent counsel with experience in franchise law is essential for determining whether a certain transaction or relationship is regulated as a franchise to minimize risk in the long-run.

 

Emerging and Established Franchisors

As a franchise system begins to emerge and mature, the company will also need legal advice to help the business expand and to manage relationships with franchisees. We provide our emerging and established franchisor clients the following services:

  • Structuring license relationships for expansion in nontraditional locations such as airports, universities, stadiums and health care facilities
  • Counseling clients with operational solutions for franchise expansion and relationship matters including supply chain issues, creation of purchasing coops and implementation of system-wide change
  • Expanding into foreign countries through master franchising, area development relationships, joint ventures and other business structures
  • Transfer and termination counseling, including preparing transfer consents and termination notices and enforcement of contract termination
  • Litigation and dispute resolution;
  • Franchise Mergers and Acquisitions;
  • Continuing state and federal law franchise law compliance and registrations, and updating the FDD and ancillary agreements to reflect changes in the franchise system

In addition, we are experienced in providing day-to-day general counsel services for franchisors in a manner more efficiently and economically than having a full-time in-house legal team. Our franchise attorneys have served as general counsel to several national and international franchise systems, making us well-equipped to handle your franchise-related operations, human resources, customer and franchisee relationships, and other matters, so you can focus on your business.

It is critical for anyone interested in purchasing a franchise to fully understand the franchisor’s franchise system and the franchise agreement prior to signing a contract. For those exploring a franchise opportunity, our experienced franchise attorneys can assist with the following services:

  • Providing a tailored consultation to assess the compatibility of the client’s needs with the respective franchise offering;
  • Reviewing and commenting on the proposed franchisor’s FDD, franchise agreement, and other relevant agreements to ensure a thorough understanding of the material provisions of the documents;
  • Negotiating possible changes to the franchise agreement with the franchisor;
  • Assisting in commercial lease negotiations;
  • Assisting in business financing;
  • Entity incorporation, employment agreements, operating agreements, and ancillary business transactions.

In addition, existing franchisees often find a need to consult with experienced franchise attorneys well-versed in franchisee/franchisor relationships. Our services include providing legal assistance and representation in default, termination, non-renewal, and encroachment matters, as well as counseling clients on day-to-day matters related to operations, employment issues, purchase and sale transactions, and vendor agreements.

Franchisors and franchisees alike will almost inevitably encounter potential or actual disputes revolving around the franchise relationship. When that time comes, we counsel our clients to fully understand and appreciate the complete risk analysis of litigation, dispute resolution, settlement, or other cost-effective approaches to avoiding litigation. We have served as primary, co-counsel and/or local counsel in franchise cases in state and federal courts and arbitrations across the United States involving numerous legal issues, including:

  • Termination and non-renewal
  • Transfer and assignment
  • Noncompete enforcement
  • Unfair competition
  • Trademark infringement
  • Enforcement of system standards
  • Underreporting of sales
  • Encroachment
  • Violations of state and federal franchise laws and relationship statutes
  • Joint employer and vicarious liability