Wiley Rein's Franchise attorneys provide a full range of legal services to meet the unique needs of companies that use or are considering using franchising to market goods and services. Our attorneys have the knowledge base and bench strength to handle all transactional, counseling, regulatory and litigation matters that franchisors may confront. Chambers USA rates the group as one of the nation's leading franchise practices, noting that the Practice “offers a wide range of services to both startup and established franchise systems, such as structuring franchise programs, preparing FDDs and representing franchisors in litigation,” (2012) and is “a strong contender in the transactional and compliance-related areas" (2011). Whether you are exploring franchising for the first time or you are an experienced franchisor, we have the experience and legal acumen to guide your company and offer practical solutions.
We pride ourselves on the personal attention that our attorneys provide to clients, a level of service acknowledged by Chambers USA, which noted that clients commended the group for its "excellent way of building relationships with their clients" (2011) We strive to learn the specifics of our clients' businesses so we can better identify and address client needs, and consider it high praise that a client told Chambers, "They're basically my right arm when it comes to our franchise work outside the USA" (2012). We neither over-lawyer matters nor delegate responsibility to lawyers the client has never met. Instead, we use our resources, including our associates and legal assistants, to promote efficiency, but never as a substitute for the personal attention of the partners with whom our clients have developed a trusting relationship. Our interest is in building long-term relationships with our clients and helping them as they grow their systems. Through these efforts, we create long-lasting relationships—we have represented many franchisors for a decade or longer.
Our Diverse Client Base | What We Do | Representative Results | Private Equity & Venture Finance Experience | Contact Us
Our Diverse Client Base
Our attorneys currently represent, and over the years have represented, franchisors of all sizes in numerous industries, ranging from new franchisors with limited operations to experienced franchisors with over 3,000 franchisees. We work with franchisors in a wide range of retail and service industries, including quick service, quick casual and casual dining restaurants, supplemental educational services, cosmetics, fashion accessories, hotels and hospitality providers, and many others. Our industry knowledge is recognized by Chambers USA, which cites sources who say of the group, “The raw knowledge of the law that they have is incredible. The law is always changing and they’re very certain about what is current and real, and that helps them empower clients to make the right decisions” (2011).
What We Do
Developing A Franchise Program—Or Avoiding One
We help clients decide whether franchising is right for them. When companies choose franchising to distribute their goods or services, our Franchise attorneys work closely with them to structure their programs and to develop user-friendly franchise documents. When companies prefer to avoid creating a franchise, we work with them to structure their agreements to escape franchise law coverage to the extent possible.
Franchisors must comply with myriad state, federal and foreign laws governing franchise offerings. We guide franchisors through this regulatory maze. Our attorneys prepare Franchise Disclosure Documents (previously known as Uniform Franchise Offering Circulars) and file state registrations for all relevant jurisdictions. When possible, we take advantage of exclusions and exemptions that permit our franchise clients to avoid or reduce the burden of regulation. In addition to assisting new franchisors, our Franchise attorneys routinely overhaul clients’ franchise documents to achieve the franchisors’ business objectives while incorporating best practices and state-of-the-art drafting techniques.
As noted by Chambers USA, the Franchise Group is “international in scope.”(2012) Our Franchise attorneys work with U.S.-based clients on a continuing stream of franchising projects in other countries, including development and negotiation of international franchise agreements, with the help of a network of trusted foreign counsel. The agreements have run the gamut of direct franchises, development agreements, master franchises and joint ventures in over 50 countries on six continents. In addition, we assist clients with international franchise terminations, ownership changes and regulatory compliance. For special problems with import-export restrictions and U.S. and international trade sanctions, we call on Wiley Rein’s International Trade experts. We have experience with international arbitration under the rules of the American Arbitration Association (AAA), the London Court of International Arbitration, the Singapore International Arbitration Centre and other forums.
Managing Franchise Relationships
We advise franchisors on their contractual rights and obligations, as well as restrictions imposed by franchise relationship laws and other laws. Clients rely on our Franchise attorneys to solve problems arising from:
- Enforcement of system standards
- Renewal and termination of franchise rights
- Noncompetition covenants
- Purchasing requirements and co-ops
- Advertising programs
- Perceived discrimination among franchisees
- Encroachment claims
- Advisory councils and franchisee associations
- Other legal challenges that arise in managing a franchise system
We also work with franchisor field, accounting and corporate staff to identify the monetary and operational defaults, provide formal notices of default, negotiate resolution of the defaults and, where necessary, proceed to termination and enforcement of post-termination obligations.
Litigation and Dispute Resolution
Wiley Rein’s Franchise Litigation Team is among the most experienced in the country. Our litigators have defended franchisors against virtually every type of claim that can arise in a franchise relationship, including:
- Allegations of wrongful termination
- Claims of breach of contract and alleged lack of good faith and fair dealing
- Disputes over franchise renewals
- Claims arising out of system acquisitions and divestitures
- Claims by franchisee associations
- Class actions
- Attacks on system purchasing requirements
- Vicarious liability for franchised outlets
- Encroachment claims, including encroachment by e-commerce
Our litigators enforce system standards, challenge violations of noncompetition covenants and enjoin trademark infringement. We represent clients regularly in state and federal courts throughout the country, as well as in arbitration proceedings, mediation and government investigations.
Acquiring and Selling Franchise Companies and Franchised Units
Our attorneys advise clients who wish to buy or sell interests in franchise companies. The transactions in which we have been involved include sale of the franchisor’s stock to a private equity investor or strategic buyer, sale of the assets of the franchise system, private placements, debt financing, project financing and financial restructuring. Our attorneys have represented acquiring franchisors and private equity funds, as well as acquired companies. We also represent franchisor clients in the sale of company-owned units to franchisees and in purchasing units from franchisees. Working with our Corporate and Tax Practices, our Franchise attorneys help with strategic planning, due diligence, purchase and sale agreements, employment issues, shareholder disputes, regulatory aspects and post-transaction issues.
Marketing a franchise concept presents its own set of challenges. For clients that decide to publish financial performance representations or earnings claims, our attorneys help compose the disclosure and appropriate disclaimers. We regularly review ads, brochures, DVDs, direct mail pieces and other franchise marketing materials for compliance with franchise sales restrictions. We guide franchisors on using the Internet and telemarketing to promote their franchise concepts, including compliance with do-not-call and CAN-SPAM requirements.
E-commerce and Privacy
Our Franchise attorneys help clients reconcile their franchise networks with the reality of e-commerce. We write policies to govern franchisee websites and intranets. We pursue domain name infringers and monitor keyword advertising and search term bidding issues.
Our Franchise attorneys also support franchisors who must contend with data transfer and data protection standards under federal, state and international law and have experience in handling other cutting-edge issues such as menu labeling and gift card regulations. We work with experts in Wiley Rein’s Privacy Practice to advise on how these laws apply within franchise networks.
We have experience in a full range of domestic and international trademark, copyright and patent matters. Our firm’s Trademark attorneys maintain thousands of trademark registrations worldwide on behalf of numerous clients. When needed, Wiley Rein’s Patent attorneys are available to assist with obtaining patent protection as well as to handle infringement disputes.
Advertising and Consumer Protection
Through our extensive representation of restaurant companies, our Franchise attorneys have been at the forefront of a wide range of nutrition and advertising issues, including menu labeling. We also counsel clients on broader consumer protection issues, including Federal Trade Commission (FTC) and state advertising standards and the risks of follow-on class action claims. We work with specialists in the Advertising Practice on gift cards, sweepstakes, contests, lotteries and similar promotions.
Our Franchise transactional and counseling attorneys have:
- Conducted franchise due diligence and served as “deal” and franchise counsel in the acquisition of numerous franchise companies. We have assessed the target company’s level of compliance with franchise sales and relationship laws, determined the status and enforcement of existing franchise agreements, assessed the level of franchise discontent and identified potential risks and liabilities that the acquisition documents should address.
- Counseled companies on a continuous stream of international franchise projects, including new master franchise and development agreements, joint ventures, franchise terminations, ownership changes and regulatory compliance in the Middle East, Asia, Central and South America, Europe, China, Russia, Hong Kong, Canada, Australia and Mexico, to name just a few.
- Overhauled clients’ franchise program documents to achieve the franchisors’ objectives of making the documents user-friendly and more attractive to franchisees. We reduced the length of franchise agreements and eliminated legalese, while incorporating best practices into the agreements.
- Counseled an international seller of fashion accessories in establishing a license program to operate its stores in casinos, airports and other captive market locations.
Our Franchise litigation attorneys have:
- Defended a major restaurant franchisor in bankruptcy proceedings against claims filed by virtually all of its franchisees.
- Obtained (and successfully defended on appeal) summary judgment in favor of a franchisor declaring that franchise agreement language providing for unlimited “automatic” renewals did not create enforceable perpetual agreements and that agreements containing that language would expire at the end of their current terms.
- Negotiated resolution of system-wide disputes between a major restaurant chain and its franchisees arising from a major acquisition, leading to vastly improved franchise relations.
- Represented a major restaurant chain in a case brought by virtually all its franchisees, challenging the franchisor’s handling of promotional payments from suppliers and its alleged interference with franchisees’ rights of association. After we obtained summary judgment for the franchisor on the supplier claim, the case was settled on terms favorable to the franchisor.
Private Equity & Venture Finance Experience
In addition to franchise-specific transactions, Wiley Rein attorneys are experienced in assisting clients with a range of private equity transactions including seed capital, angel financing, venture capital financing and other private equity and debt structures. When representing investors we take the time to understand their objectives and are beholden solely and exclusively to their best interests.
Clients looking to raise private equity, from start-ups to established companies looking to grow their businesses, have come to rely on Wiley Rein attorneys for assistance with domestic and international venture capital financing, debt and equity offerings, project financing, secured and unsecured financing and leasing. Our clients include companies and investors in the franchise, communications, technology and Internet industries among others.
Wiley Rein has extensive experience representing private equity sources both as “deal” counsel and special counsel. We represent several of the largest investment banking firms in New York as special counsel, helping them to understand the competitive position and prospects for potential investments in highly regulated industries including media, telecom, wireless, VoIP, government contractors, air transportation, food and drug, and pharmaceuticals. As deal counsel, we perform the full range of corporate and intellectual property due diligence, and prepare and negotiate documentation of investments.
Representative recent experience includes:
- Completing a series of recapitalization transactions between the world’s largest temporary staffing company and its franchisees, including the buy out of multiple franchisees, the sale of company-owned offices to franchisees and negotiation with financiers on buy-out, capital expenditure and operating financings.
- Representing a private investor group in connection with a $1 million investment in an early-stage network security software company.
- Representing a private investor group in connection with a $500,000 investment in the producer of photovoltaic energy production modules.
- Representing a private investor group in connection with a $1.2 million second-round financing of a software development tool manufacturer.
- Representing a private investor group in connection with a $600,000 investment in a web based, customized news service.
- Conducting franchise due diligence and serving as special counsel in the leveraged acquisition of numerous franchise companies.
- Assisting entrepreneurs and transitioning entities in the negotiation and documentation of seed financing, venture capital and private placements.
Structuring Business Relationships
Our attorneys provide significant assistance to clients in structuring their business relationships. The nature of the relationships developed with the assistance of our attorneys range from owner and investor to service provider and customer. The cutting edge issues characteristic of much of the firm’s practice, particularly in the communications and intellectual property areas, means that many of these relationships are formed in an atmosphere of great creativity and joint exploration. We assist our clients in the formation and maintenance of the full range of business entities, including limited liability companies, corporations (both U.S. and offshore) and general and limited partnerships. An element of this aspect of our practice is assisting our clients in determining the most efficient business structure in light of the client’s needs. Working with our Tax attorneys, we structure transactions in a manner that best serves the current and future interests of our clients.
Financial Restructuring & Bankruptcy
Many private equity transactions are a part of a financial restructuring. Working with our Bankruptcy Group, we provide advice and support with acquisitions of entities and assets from bankrupt organizations, financial restructuring associated with plans of reorganization and pre-bankruptcy work-outs.
Commercial Litigation and Dispute Resolution
Transactions and business relationships often reach an impasse or conflict requiring a careful assessment and pursuit of legal rights. Wiley Rein litigators provide counseling and representation in connection with litigation over contract breaches, corporate control, intellectual property infringement, employment disputes and other business conflicts. We are governed, foremost, by our clients’ financial interests and business goals, and we structure an approach to achieve the client’s objectives. Our attorneys have extensive experience in arbitration, mediation and litigation before local as well as federal courts.
ISSUE: DECEMBER 5, 2012