top of page

    Franchising

 

  • General franchise-related tasks, such as assistance with developing advertising programs and materials,  compliance with disclosure and relationship regulations,  counseling on applicable registration requirements, developing franchisee supply chains, establishing joint ventures and other corporate entities, terminations and transfers, mergers and acquisitions, non-disclosure agreements (NDAs), preparing disclosure documents, restructuring existing franchise relationships, structuring advertising funds, structuring alternative distribution relationships that may avoid regulation under applicable franchise laws, structuring and documenting franchise programs.

 

  • Assistance to prospective franchisees with due diligence and valuation tasks prior to purchasing a franchise.

 

  • Review of the Franchise Disclosure Document (FDD) and verification that the FDD was provided to the prospective franchisee at least 14 calendar days prior to the prospective franchisee executing the franchisor’s proposed franchise agreement and providing the required down payment, as required pursuant to the Federal Trade Commission (FTC) Franchise Rule.

 

  • Particular attention to the review of FDD Items 19 and 20, of the 23 Items mandated in the Franchise Rule, which are the only Items in which the franchisor must reveal information about the past performance of the franchise and information about all (or at least 100) current and former franchisees (the other 21 Items are various representations by franchisor about the operations and history of the franchisor’ business).

 

  • Compliance with all Federal disclosure statutes and with various state relationship laws (regulating certain aspects of the franchisor-franchisee relationship such as encroachment, non-compete, price discrimination, renewal – all states prohibit termination or non-renewal of a franchise or dealer agreement absent good cause – repurchase obligations, required purchases, termination, transfer), and state laws regulating when the FDD must be provided to the prospective franchisee and state laws requiring registration of franchise-related documents.

 

  • Drafting and negotiating the franchise agreement (with particular attention to those provisions most onerous for franchisees, such as assignment restrictions, choice of venue – always in the jurisdiction of the franchisor’s headquarters – confidentiality, lack of franchisor accountability, mandatory arbitration or mediation, mandatory supplier designations, non-competition, respective duties of franchisee and franchisor, royalty payments, then-current renewal terms, territory boundaries, transfer restrictions, unrestricted operations manual changes, unilateral default and termination), and any ancillary agreements as may be required by the franchisor, such as approved vendor agreements, entity formations, inter-company license agreements, lease rider, non-disclosure, non-competition, personal guaranty, release, state-required addenda, territory agreement, trademark agreement.

 

  • Drafting and negotiating the area development agreement, with particular attention to key provisions, such as exclusivity rights and exceptions, number of locations to be developed and time frames for development, royalties and fees, site selection and approval responsibilities of the parties, territory definition, transfer restrictions, termination.

 

  • Drafting and negotiating for other franchise-related transactions, such as the purchase or sale of existing franchises, commercial leases, construction contracts, various real estate issues (such as collateral assignments, contingent options, exclusivity relationships, franchisor purchase options, franchisor step-in options, master franchise agreements, renewal rights – which are generally not guaranteed in the franchise agreement, but rather framed as a franchisee’s right of first refusal to accept whatever renewal terms offered by the franchisor).

 

  • Drafting and negotiating financing agreements for franchisees, such as low-doc Small Business Administration (SBA)loans, portfolio loans, rollovers as business start-ups (ROBS), SBA 7(a) loans, unsecured loans.

 

  • Consultation for franchise-related disputes, such as relating to the advertising and marketing fund, alleged antitrust violations (such as customer restrictions, exclusive dealerships, exclusive territories, unilateral refusals to deal), franchise default, enforcing the basic duties of franchisors (such as advertising assistance, identifying acceptable third-party vendors, locating appropriate sites, managerial assistance, providing operating manuals, training), franchise encroachment, fraud claims relating to the franchise purchase process, inadvertent franchising, non-competition, non-renewals, trademark, wrongful termination.

 

  • Familiarity with domestic and international franchise guidelines, such as those of the British Franchise Association, European Franchise Federation, Federal of for Commercial Agencies and , consultation for franchisee and franchisor succession planning.

 

  • Consultation regarding digital marketing for franchisees and possible franchisor restrictions franchise agreement.

 

  • Consultation for a hotel franchise purchase, including choice of brand (choice of clientele), substantial initial costs (construction, numerous employees), franchisor requirement for constant upgrades or remodeling, increased possibility of litigation (from employees, guests, invitees), occupancy (seasonal or year-round).

​

    Last updated 200514_2321

bottom of page