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Counterpoint: A Consultant's-Eye View
Tension often exists between lawyer and consultant because many issues do not neatly fall into purely legal or purely business buckets. Consultants chafe at lawyers who make recommendations concerning business strategies that they feel are inappropriate or based upon limited knowledge or research. Lawyers chafe at consultants 'practicing law without a license.' Indeed, from the viewpoint of the professional consultants, the practice of business without due care by lawyers is as risky (maybe more so) for the client as is the practice of law by the non-lawyer.
Many consultants do not themselves employ lawyers to prepare documents for their clients because they believe that it is essential for the lawyer/client relationship to be direct and unencumbered. However, to a certain extent they must deal with legal issues in working with their clients just as lawyers must deal with certain business strategies.
For example, in-term and post-term covenants are legal considerations, but ultimately it will be the business necessity of those provisions that will determine their enforceability. The term and structure of the relationship, the obligation of the parties, and the initial and ongoing fees all have legal consequence, but it will be the return on investment for the franchisor and franchisees that will ultimately determine whether the economic structure of the franchise system is sound. Operations manuals content and training are mostly business issues, but issues concerning compliance with employment laws and vicarious liability issues raise their ugly head at times.
The Business Overlay
In my company, we manage the legal issues with emerging franchisors by using a proprietary document called The Business Overlay. This document summarizes in logical order the relevant business and management issues to which our client has agreed. Typically, to some extent, our client's attorneys have participated in the development process and have seen interim drafts of the Business Overlay. The legal documents are based on the Overlay, but those documents are the lawyers' work product from beginning to end. While we will review them, our review is simply to ensure that the documents reflect the business strategies that we, and the client, already have outlined.
Franchising is, in the end, a business strategy that exists in a regulatory and legal environment. Our role with clients is to help them develop strategies and tactics that enable them to maximize the value of their enterprises. To do that requires consultants to have knowledge of the law, but they never should get caught in the trap of unnecessarily practicing law.
Michael H. Seid is president of Michael H. Seid & Assocs. LLC, a franchise consulting firm based in West Hartford, CT. A member of this publication's Editorial Board, Seid is co-author (with Wendy's late founder, Dave Thomas) of Franchising for Dummies.
Tension often exists between lawyer and consultant because many issues do not neatly fall into purely legal or purely business buckets. Consultants chafe at lawyers who make recommendations concerning business strategies that they feel are inappropriate or based upon limited knowledge or research. Lawyers chafe at consultants 'practicing law without a license.' Indeed, from the viewpoint of the professional consultants, the practice of business without due care by lawyers is as risky (maybe more so) for the client as is the practice of law by the non-lawyer.
Many consultants do not themselves employ lawyers to prepare documents for their clients because they believe that it is essential for the lawyer/client relationship to be direct and unencumbered. However, to a certain extent they must deal with legal issues in working with their clients just as lawyers must deal with certain business strategies.
For example, in-term and post-term covenants are legal considerations, but ultimately it will be the business necessity of those provisions that will determine their enforceability. The term and structure of the relationship, the obligation of the parties, and the initial and ongoing fees all have legal consequence, but it will be the return on investment for the franchisor and franchisees that will ultimately determine whether the economic structure of the franchise system is sound. Operations manuals content and training are mostly business issues, but issues concerning compliance with employment laws and vicarious liability issues raise their ugly head at times.
The Business Overlay
In my company, we manage the legal issues with emerging franchisors by using a proprietary document called The Business Overlay. This document summarizes in logical order the relevant business and management issues to which our client has agreed. Typically, to some extent, our client's attorneys have participated in the development process and have seen interim drafts of the Business Overlay. The legal documents are based on the Overlay, but those documents are the lawyers' work product from beginning to end. While we will review them, our review is simply to ensure that the documents reflect the business strategies that we, and the client, already have outlined.
Franchising is, in the end, a business strategy that exists in a regulatory and legal environment. Our role with clients is to help them develop strategies and tactics that enable them to maximize the value of their enterprises. To do that requires consultants to have knowledge of the law, but they never should get caught in the trap of unnecessarily practicing law.
Michael H. Seid is president of Michael H. Seid & Assocs. LLC, a franchise consulting firm based in West Hartford, CT. A member of this publication's Editorial Board, Seid is co-author (with Wendy's late founder, Dave Thomas) of Franchising for Dummies.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
'Huguenot LLC v. Megalith Capital Group Fund I, L.P.': A Tutorial On Contract Liability for Real Estate Purchasers
In June 2024, the First Department decided Huguenot LLC v. Megalith Capital Group Fund I, L.P., which resolved a question of liability for a group of condominium apartment buyers and in so doing, touched on a wide range of issues about how contracts can obligate purchasers of real property.
CoStar Wins Injunction for Breach-of-Contract Damages In CRE Database Access Lawsuit
Latham & Watkins helped the largest U.S. commercial real estate research company prevail in a breach-of-contract dispute in District of Columbia federal court.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.