Franchising and Distribution

Franchises and other distribution relationships present both challenges and opportunities for companies. Changes in distribution methods, consolidation of businesses, consumer-buying patterns and marketing approaches, combined with emerging legal trends, make it imperative that clients are presented with options for structuring their distribution system.

The Franchising and Distribution attorneys at Polsinelli Shughart PC help individuals and companies plan, structure and implement the special business relationships of franchising and other forms of distribution. We have assisted clients in the initial strategic evaluation of potential franchise offerings, along with handling the registration and exemption filings that may be associated with this in various states. We also have experience negotiating franchise and licensing agreements, drafting franchise disclosure documents and dealing with all aspects of franchisee/franchisor relationships. We work to minimize our clients’ financial risk, help them avoid legal disputes and facilitate profitable decisions and long-term growth. Our experience in franchising and distribution encompasses clients in many industries, including, but not limited to:

  • Snack foods
  • Fast foods
  • Software
  • Medical device service
  • Tire, automotive and household goods
  • Heavy equipment parts and services
  • Temporary personnel
  • Commercial cleaners

Our services include:

  • Evaluation of Business Opportunities - We counsel clients to meet the challenges of setting up or expanding franchise and distribution systems, including special financial structures and the avoidance of legal disputes
  • Business Structure and Formation - We analyze and prepare all necessary documents and agreements for clients interested in establishing or owning and investing in those franchises and distributorships, including:
    • License agreements
    • Offering circulars and documents
    • Franchise and territory agreements
    • Performance standard addendums
    • Lease agreements
    • Operation and procedure manuals
    • Incorporation
    • Joint venture
    • Shareholder and other business documents
  • Corporate and Financial Issues - Our attorneys negotiate and prepare documents to buy and sell businesses and advise clients on various sources of financing for purchasing, operating and expanding businesses. We routinely draw on the firm’s substantial business legal experience in the areas of:
    • Tax, estate and business planning
    • Corporations, joint ventures and partnerships
    • Securities law
    • Mergers and acquisitions
    • Employee benefits
    • Employee relations and labor law
  • Regulatory Compliance - We guide clients through the regulatory requirements of the Federal Trade Commission’s franchise regulations and state laws governing pre-sale disclosures and initial annual registration of franchise documents. Our services include:
    • Marketing strategy assistance and advertising review
    • Preparation and negotiation of franchise, license and distributorship agreements
    • Procedures to avoid disputes
    • Antitrust and other laws relating to marketing decisions and competition
    • Termination and renewal of business relationships
    • Business transfer
  • Licensing - We represent clients in licensing and protecting intellectual properties in the U.S. and international markets. These properties include:
    • Trademarks, copyrights and patents
    • Technology and trade secrets
  • Litigation - Our attorneys have extensive experience representing both plaintiffs and defendants in franchising, licensing and distributorship disputes (litigation, arbitration and mediation)

Our team blends legal skills and pragmatic experience in domestic and international franchising, licensing and distribution. Several of our attorneys have experience as in-house counsel for franchisors, licensors and distributors. Our group also includes business litigation lawyers with broad experience in representing clients in franchising disputes.

Notable Experience

 
  • Successfully closed a transaction involving our client, the purchaser of a franchise system, including over 300 franchisees in three separate business lines with location in the U.S. and Canada. As part of this transaction, we assisted our client with assembling a purchaser group, including two equity funds, completing the transaction using senior and mezzanine debt and equity investments.
  • Representation of a 50 percent owner of a fast casual dining franchise, with over 30 franchisees in the split-up of the business, ensuring that our client retained perpetual rights to the franchise system and an exclusive territory.
  • Reviewed and analyzed strategy for prospective franchisees considering the purchase of such franchises as Pizza Hut, Ruby Tuesday, Burger King, McDonald’s, UPS Store, Lock Tight Self Storage, Nemos Seafood, Howard Johnson Hotels and Jiffy Lube. This participation includes all facets normal and present in the purchase of a business, including organization of the appropriate purchasing entity, due diligence concerning the purchase, assistance on completion of financing for the purchase, negotiation of the documents with the franchisor and closing of the purchase.
  • Conducted mediation on behalf of our franchisor client to settle termination and break-up issues with franchisee who owned rights to three franchise territories
  • Successfully closed a transaction involving our client, a large beverage distributor, in the purchase of certain beverage distribution rights in neighboring states
  • Represented a national auto body repair franchisor in its organization, all federal and state franchise filings and continual updates of disclosure documentation

Newsletters & E-Alerts

December 1, 2009
On October 30, 2009, the Federal Trade Commission (FTC) delayed the enforcement date of the “Red Flag Rules” for the third time - until June 1, 2010. The Red Flag Rules require the implementation of a written compliance program to provide for the identification and detection of, and response to patterns, practices, or specific activities (red flags), that could indicate identity theft.