Why your franchise lawyer can be your new best friend

Why your franchise lawyer can be your new best friend

Gordon Drakes offers the essential details you’ll need to select your franchise lawyer and suggests what you can expect from them

Franchising is a complex area of law and, aside from ensuring that your business is franchisable and ready to franchise, choosing the right franchise lawyer is a key strategic decision.

Franchising law is a patchwork of different commercial laws and regulations, including contractual principles, consumer protection law, competition/anti-trust law, trademark and other IP law, confidentiality and trade secrets law and data protection law. All of these laws and legal principles impact on the legal and commercial franchise relationship and need to be woven carefully into the franchise agreement, the supporting documentation and the processes which support the franchise network.

The legal documentation, and ongoing legal advice, are fundamental building blocks of any franchise network. Get the right specialist advice and you maximise the chances for long term success and minimise the risks of incurring big expenses and liabilities down the road.

However, choosing a franchise lawyer who is a good fit for your business can be difficult. As the franchising model has taken root in the economy, the market for franchise legal services has become crowded, with other professionals occasionally downplaying the importance of legal advice and a number of lawyers claiming to have worked on franchise deals, but who on closer inspection are really just “dabbling” and are not franchise specialists at all.

Below are five suggested criteria for selecting a franchise lawyer.

Do they walk the walk?

Referrals from other franchisors or professionals in the franchise sector are always a good starting point. Independent legal directories, such as Chambers & Partners, Who’s Who and The Legal 500, rank lawyers and law firms for their experience in franchising, using independent research and feedback from clients and other industry professionals. If a lawyer or law firm does not feature in these rankings, you should question why that is.

Have a look at their online profiles – are they writing regularly about franchising issues and connected to other franchise professionals?

Finally, are they an active member of any national franchise association, such as the British Franchise Association in the UK? If not, they will not be up to date on best practice and will likely be ignorant of the principles of ‘ethical franchising’, which are an important part of instilling confidence amongst your franchisees and ensuring that your network functions in accordance with established best practice.

What is the nature of their experience and expertise?

Does their client base compromise of majority franchisor or franchisee clients? This is important to understand, as a franchisee-focussed lawyer will inevitably see the franchise relationship through a different lens to a franchisor-focused lawyer. For example, a franchisee-focused lawyer advising a franchisor may instinctively look to smooth some of the sharper edges of a franchise agreement, or take a more conciliatory approach to disputes. On a one-on-one basis, this approach might seem reasonable but it is not always appropriate when a franchisor has to consider how it can efficiently and effectively monitor and police multiple legal relationships in a franchise network.
Some experience of advising both franchisors and franchisees is valuable, as it enables a lawyer to see the relationship from different angles, which should translate into practical and effective advice, particularly in relation to resolving disputes.

Although less relevant in civil law jurisdictions, English law practitioners and lawyers in other common law jurisdictions (such as the US, Canada, New Zealand and Australia) tend to fall into two broad camps – litigators or transactional lawyers. It is important to understand the primary practice area of your franchise lawyer. If they primarily deal with franchise litigation, are they the right person to advise on structuring, drafting and rolling out agreements, and vice versa? Your franchise lawyer should be open with you about their core competencies and the areas where they need to supplement this with other specialist colleagues – see suggestion 4.

Do they understand your sector?

Franchising is a business expansion model which can be applied to almost any business, irrespective of sector. However, it is important to use a lawyer franchise who has both a deep understanding of franchising as a business expansion model (at the horizontal level) and who also who has worked with businesses in your sector (at the vertical level).

Each sector will apply the franchising model differently (for example, the approach to non-competition restrictions in hotel franchising is different from the typical approach in the food & beverage franchising), and if your franchise lawyer does not understand this, you may end up with sub-standard documents and wasting time and money on irrelevant points in negotiations.

Equally, multi-sector experience is valuable, as a creative franchise lawyer with this type of experience can take best practice from one sector and apply it to another.
 
Size matters

As your network grows and matures, the legal and commercial issues you face will become more sophisticated and varied. There will inevitably come a tipping point where you require specialist legal advice on areas such as franchise litigation, data protection, competition law, trademark protection and enforcement, corporate finance and tax, or real estate. Whilst your franchise lawyer should understand how these laws and legal principles intersect with the franchise relationship, no franchise lawyer can claim to be a specialist in all of these areas.

Ideally, your franchise lawyer will be a gatekeeper to specialists in these areas and who have hands-on experience of franchising. Realistically, this is only achievable in law firms of a certain size, and with institutional knowledge of franchising.

The alternative is to use different lawyers or law firms to advise on these different areas, but disaggregating the supply of core franchise legal services is time-consuming, expensive and risks undermining the foundations of the network and/or your strategic objectives.

International platform

International expansion involves a raft of new issues to consider, from protecting your IP abroad, complying with mandatory local laws and franchise-specific legislation, localising the system, tax structuring and using the right franchise model (such as joint venture franchising, direct franchising, master franchising and development franchising).

It is therefore important to understand whether or not your prospective or incumbent advisors have the relevant experience and capacity to assist effectively. If they have an understanding of how franchising is regulated internationally, and have assisted other brands on their market entries, they will be able to help you plan effectively, benchmark your commercial deals and avoid common pitfalls.

If they tick this box, find out how they go about obtaining local law advice. A network of international offices is attractive, and it is important that your franchise lawyers act as the one point of contact for coordinating advice. However, as franchising continues to be a niche area of law, your franchise lawyer should only use local specialist lawyers on your deals, even if that means by-passing their own local office if the expertise is not there. Some ‘global’ law firms do not have this level of flexibility, so ask the question of who is providing the local advice and what their experience is.

In summary…

The list above is not exhaustive – other equally important considerations include flexibility on pricing model, personality, partner availability and size of the team and whether the law firm can demonstrate innovation in the way it delivers legal services.

Perhaps the key takeaway is to draw up a list of criteria, rank them in terms of priority and then start looking in the rights places. Once franchise counsel is appointed, review that decision every few years – as your business evolves, so will your priorities and a lawyer or law firm which was a good fit at the beginning of the journey may not be the right companion for the next fork in the road.

you may be interested in

franchise directory

  • TaxAssist Accountants

    Business & Professional Services, Financial Services, <100K, Featured

  • Cafe2U

    Food & Catering, Coffee, Take-away, <100K, Featured

  • 800 Pizza

    Food & Catering, Fastfood, Pizza, Take-away, Featured

view more
Connect with Linkedin Logo
Global White Logo Click Here
Close button

WHAT DO WE USE YOUR INFORMATION FOR?

Any of the information we collect from you may be used in one of the following ways: To personalize your experience (your information helps us to better respond to your individual needs) To improve our website (we continually strive to improve our website offerings based on the information and feedback we receive from you) To improve customer service (your information helps us to more effectively respond to your customer service requests and support needs) To process transactions your information, whether public or private, will not be sold, exchanged, transferred, or given to any other company for any reason whatsoever, without your consent, other than for the express purpose of delivering the purchased product or service requested. To administer a contest, promotion, survey or other site feature To send periodic emails The email address you provide for order processing, will only be used to send you information and updates pertaining to your order. Note: If at any time you would like to unsubscribe from receiving future emails, we include detailed unsubscribe instructions at the bottom of each email.

HOW DO WE PROTECT YOUR INFORMATION?

We implement a variety of security measures to maintain the safety of your personal information when you place an order or enter, submit, or access your personal information We offer the use of a secure server. All supplied sensitive/credit information is transmitted via Secure Socket Layer (SSL) technology and then encrypted into our Payment gateway providers database only to be accessible by those authorized with special access rights to such systems, and are required to keep the information confidential. After a transaction, your private information (credit cards, social security numbers, financials, etc.) will not be stored on our servers.

DO WE USE COOKIES?

Yes (Cookies are small files that a site or its service provider transfers to your computers hard drive through your Web browser (if you allow) that enables the sites or service providers systems to recognize your browser and capture and remember certain information. We use cookies to help us remember and process the items in your shopping cart, understand and save your preferences for future visits, keep track of advertisements and compile aggregate data about site traffic and site interaction so that we can offer better site experiences and tools in the future. We may contract with third-party service providers to assist us in better understanding our site visitors. These service providers are not permitted to use the information collected on our behalf except to help us conduct and improve our business.

DO WE DISCLOSE ANY INFORMATION TO OUTSIDE PARTIES?

We do not sell, trade, or otherwise transfer to outside parties your personally identifiable information. This does not include trusted third parties who assist us in operating our website, conducting our business, or servicing you, so long as those parties agree to keep this information confidential. We may also release your information when we believe release is appropriate to comply with the law, enforce our site policies, or protect ours or others rights, property, or safety. However, non-personally identifiable visitor information may be provided to other parties for marketing, advertising, or other uses.

THIRD PARTY LINKS

Occasionally, at our discretion, we may include or offer third party products or services on our website. These third party sites have separate and independent privacy policies. We therefore have no responsibility or liability for the content and activities of these linked sites. Nonetheless, we seek to protect the integrity of our site and welcome any feedback about these sites.

CHILDRENS ONLINE PRIVACY PROTECTION ACT COMPLIANCE

We are in compliance with the requirements of COPPA (Childrens Online Privacy Protection Act), we do not collect any information from anyone under 13 years of age. Our website, products and services are all directed to people who are at least 13 years old or older.

ONLINE PRIVACY POLICY ONLY

This online privacy policy applies only to information collected through our website and not to information collected offline.

TERMS AND CONDITIONS

Please also visit our Terms and Conditions section establishing the use, disclaimers, and limitations of liability governing the use of our website at globalfranchisemagazine.com/terms-conditions

YOUR CONSENT

By using our site, you consent to our online privacy policy.

CHANGES TO OUR PRIVACY POLICY

If we decide to change our privacy policy, we will post those changes on this page

CONTACTING US

If there are any questions regarding this privacy policy you may contact us using the information below. All correspondence relating to the Website should be sent to: Global Franchise 21/23 Phoenix Court Hawkins Road Colchester Essex CO2 8JY Email: subscriptions@aceville.co.uk