Wiley Rein’s Franchise Group provides a full range of legal services to meet the needs of franchisors. In addition to our domestic expertise, our attorneys specialize in helping U.S. franchisors expand internationally, having done franchise deals in more than 60 countries and in helping non-U.S. franchisors develop in the U.S. Chambers USA rates the Group as one of the nation’s leading franchise practices, noting that it is “a strong contender in the transactional and compliance-related areas” and “offers a wide range of services to both startup and established franchise systems.” Our attorneys also have extensive experience as franchise counsel in a variety of financial transactions, including whole business securitizations (WBS).
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.” We are committed to learning about 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.” We regularly provide franchise compliance training to our clients at no cost and staff matters so that we do not over-lawyer matters, nor do we 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 goal is to build long-term relationships with our clients and help them as they grow their systems. As a result of our efforts, we have represented many franchisors for a decade or longer.
Our Diverse Client Base | What We Do | Representative Results | 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 more 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. Chambers USA recognized our extensive industry knowledge, citing sources who noted that “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.”
What We Do
As noted by Chambers USA, the Franchise Group is “international in scope.” 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 local counsel. The agreements have run the gamut of direct franchises, development agreements, master franchises, and joint ventures in more than 60 countries on six continents. In addition, we assist clients with international franchise terminations, ownership changes, and regulatory compliance. When needed, we call on Wiley Rein’s International Trade experts for assistance with U.S. and international trade sanctions and compliance with U.S. laws, such as the Foreign Corrupt Practices Act (FCPA). We have experience with international arbitration under the rules of the American Arbitration Association, the London Court of International Arbitration, the Singapore International Arbitration Centre, and other forums.
Our attorneys regularly serve as franchise counsel in a variety of financial transactions such as WBS, private placements and public offerings, debt financing, project financing, and other types of financial restructurings. Our attorneys also advise clients in buying and selling franchise systems, including sales to a private equity investor or strategic buyer and the sale of the franchise system assets.
Developing a Franchise Program—Or Avoiding One
We help clients, both domestic companies and non-U.S. companies seeking to develop in the U.S., decide whether franchising is the right expansion method 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.
We guide franchisors through the myriad state, federal, and foreign laws that govern franchise offerings. Our attorneys prepare Franchise Disclosure Documents (FDDs)—previously known as Uniform Franchise Offering Circulars—and register the franchise offerings in all relevant jurisdictions. We work with clients to create FDDs that not only comply with all legal requirements but are also effective sales tools with financial performance representations (FPRs) where appropriate. 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 particular franchisor’s business objectives while incorporating best practices and state-of-the-art drafting techniques.
Managing Franchise Relationships
We advise franchisors on their contractual rights and obligations as well as restrictions imposed by franchise relationship laws and other laws, including enforcement of system standards, renewal, and termination of franchise rights and noncompetition covenants, among others. We also work with franchisor field, accounting, and corporate staff to identify 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
Our 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 claims 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, and encroachment claims, including encroachment through 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.
We represent franchisors 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 compliance, and post-transaction issues.
We manage thousands of domestic and international trademark registrations for a number of clients. We also routinely monitor the issuance of new domain names to protect our clients from cybersquatters. Our firm’s Intellectual Property attorneys also are available to assist with obtaining copyright or patent protection and to handle infringement disputes.
Our franchise transactional and counseling attorneys have:
- Represented a number of franchisors 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 more than 60 countries.
- Served as franchise counsel in a wide variety of financial transactions, including a $1.25 billion whole business securitization transaction and numerous public and private offerings.
- Served as deal and franchise counsel in the acquisition of numerous franchise companies. We assess the target company’s level of compliance with franchise registration/disclosure and relationship laws, determine the status and enforcement of existing franchise agreements, assess the level of franchisee discontent, identify potential risks and liabilities that the acquisition documents should address, draft, and negotiate the franchise portions of the deal documents, and develop new franchise programs for the purchasers.
- Served as deal and franchise counsel in the disposition of a number of franchise companies. We assess the seller’s level of compliance with franchise registration/disclosure and relationship laws, correct noncompliance issues, and draft and negotiate the franchise portions of the deal documents.
- 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 a variety of retail businesses in establishing licensing programs that avoided franchise registration/disclosure and relationship law restrictions.
- Developed separate programs for a number of franchisors that allowed them to successfully develop in captive market locations such as airports, college campuses, military bases, casinos, stadiums, and convention centers.
Our franchise litigation attorneys have:
- Successfully defended a major restaurant franchisor in chapter 11 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 of 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.
- Successfully represented a franchisor in litigation brought by a franchisee whose agreement was terminated for unauthorized marketing that denigrated the brand.
ISSUE: AUGUST 4, 2014
IN THIS ISSUE
California State Assembly to Vote on New Franchise Legislation
By Robert A. Smith
August 4, 2014
Considerations Before Buying a Franchisor
By Robert A. Smith and Kimberly Sikora Panza
March 31, 2014 | Law360
Considerations in Buying a Franchise Company – What to Look for and Why
By Robert A. Smith and Christine E. Connelly
March 26, 2014
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