Court Watch

Arbitration Award Set Aside, But Under Very Unique Circumstances

There are several reasons why both franchisors and franchisees like arbitration. One of them is finality. After the arbitration award is rendered, the likelihood of a successful appeal from the decision is minimal. But minimal and impossible are two outcomes that are nevertheless distinct, as demonstrated in the currently unreported decision, Twin Cities Galleries, LLC v. Media Arts Group, Inc. No. 02-2013 2006 WL 334908 (D. Minn., Feb. 13, 2006).

The salient issue in Twin Cities centered upon choice of law. The petitioners-franchisees apparently were located in Minnesota, and the respondents (a franchisor and its officers or directors) were located in California. The parties had selected by contract for California law to control. The arbitration panel decided that it would honor the contractual agreement and therefore refused to recognize the importance of the Minnesota Franchise Act, which expressly states:

[A]ny condition, stipulation or provision, including any choice of law provision, purporting to bind any person … acquiring a franchise … to waive compliance or which has the effect of waiving compliance with any provision of [the Minnesota Franchise Act] or any rule or order thereunder is void.

The arbitration panel consequently refused to hear certain evidence as to whether the relationship between the parties was a franchise and ultimately dismissed all of the franchisees' claims brought under the Minnesota Franchise Act.

The court hearing the franchisees' petition to vacate the panel's decision seemingly showed a significant reluctance to reverse the arbitration award in favor of the franchisor. Paying deference to the Federal Arbitration Act ('FAA'), the court refused to reverse the arbitrators' decision on any of the grounds enumerated in the FAA, which include corruption or fraud generally, partiality or corruption or misconduct by the arbitrators, or the arbitrators' exceeding their authority. The court noted, however, that there were at least three judicially developed reasons for setting aside an arbitrator's award. These included: 'complete irrationality,' manifest disregard of the law, and failure by the arbitrators to recognize a well-defined and dominant public policy.

The petitioners pressed three theories to warrant setting aside the arbitration panel's decision. The court found that the first argument ' manifest disregard of the law ' was not warranted under the circumstances. The arbitrators considered what the applicable law should be and ruled in favor of the parties' contractual choice: California. The arbitrators had also concluded that the FAA pre-empted the Minnesota Franchise Act's provisions. The court thus found that the issues were duly considered and was not willing to substitute its judgment for the judgment of the arbitrators.

The court also found that there was no misconduct by the arbitrators. Petitioners argued that the arbitrators' failure to hear all of the evidence regarding the issue of whether a franchise fee had been paid justified a reversal or rehearing. The court, however, disagreed, noting that the standard under scrutiny required bad faith, which had not been demonstrated by the petitioners as being present in the current case.

The court did, however, find attractive the argument that the Minnesota public policy justified a remand of the case. The ultimate disposition of Twin Cities was a function of the unique history of the Minnesota Franchise Act. Initially, the language italicized above was not included in the statute. In Modern Computer Systems., Inc. v. Modern Banking Systems., Inc., 871 F.2d 734 (8th Cir. 1989) (en banc) (decided before the italicized language above was added to the Minnesota Franchise Act), the Eighth Circuit concluded that Minnesota's public policy to protect the interest of aggrieved franchisees was not sufficiently fundamental to overcome Minnesota's countervailing policy of enforcing parties' choice-of-law agreements. Subsequent to this decision, the Minnesota Legislature amended the Minnesota Franchise Act, as quoted above, to expressly state that choice-of-law provisions requiring the application of other state laws were void.

Thus, the court found the narrow basis to give the petitioners the relief they sought. The court ultimately ruled that the state of Minnesota affirmatively established an explicit, well-defined, and dominant public policy to protect Minnesota franchisees.

The peculiar circumstances of the case, as well as the narrow holding in favor of the franchisor, should not give franchisee advocates much comfort if their businesses are located outside of the confines of Minnesota. For those franchisees located in the warmer and kinder climates, Twin Cities will not likely affect their relationship with their franchisor, nor will their contractual relationships give them the same cushion of protection afforded to Minnesota franchisees. The case represents a victory for franchisees, but a narrow one at that. The case is currently on appeal.

Assumability of Trademark License Agreement Limited in Bankruptcy Environment

From the franchisor's perspective, a significant objective of almost all, if not all, franchise agreements is to control who the franchisee will be. Franchise agreements customarily have lengthy and often multiple provisions that will ensure that the ownership and operation of the franchise will be by an acceptable party. Typically, the franchise agreement will recite that the relationship with the franchisee is a 'personal' one and, consequently, the franchisee's interest, or that of its owners if the franchisee is an entity, cannot be transferred without the franchisor's prior written consent. In many cases, the franchisor is given the right to arbitrarily withhold its consent; in others, there are sufficient conditions on any transfer such that the franchisor may be anything but totally arbitrary in deciding whether to grant consent.

When a franchisee files for the protection of the bankruptcy courts, either under Chapter 7 (liquidation) or Chapter 11 (reorganization) of the Bankruptcy Code, the rules of the game and their effect may change. Bankruptcy courts and the bankruptcy setting can be creatures unto themselves, in that 1) the Bankruptcy Code provides a slightly different set of rules from the normal rules of contract on matters of enforceability; and 2) because of the importance of time in bankruptcy settings, the courts can often induce decisions simply by doing nothing for an extended period of time, forcing the parties to settle upon terms that might not have been acceptable in ordinary circumstances.

Many of the provisions in the Bankruptcy Code and the judicial decisions interpreting or applying the Code have traditionally favored debtors and given them a slight edge in the bankruptcy judicial setting. However, where issues of ownership and control of intellectual property (patents, copyrights, and trademarks) have been involved, the more recent judicial pronouncements have tipped the scale in favor of creditors, and in the franchisor-franchisee contexts, this has typically translated into franchisors.

As a matter of background, bankruptcy executory contracts (which typically would include franchise agreements) can be either assumed or rejected by the debtor. If they are assumed by the debtor, all of the defaults must be cured and adequate assurance of future performance must be provided. This general rule, however, has been held inapplicable in certain circumstances. Specifically, '365(c)(1) of the Bankruptcy Code states that the normal rule of
assumability does not apply if:

(A) Applicable law excuses a party, other than the debtor to such contract ' from accepting performance from or rendering performance to an entity other than ' the debtor in possession, whether or not such contract ' prohibits or restricts assignment of rights or delegation of duties; and

(B) such party does not consent to such assumption or assignment.' (emphasis added)

Under recent precedents, non-exclusive patents and copyright licenses have been construed as being non-assignable even if the two requisites described above (ie, defaults are cured and adequate assurance of future performance is provided) have been met because of the peculiar nature of the relevant intellectual property rights.

In N.C.P. Marketing Group, Inc. v. Blanks (In re N.C.P. Marketing Group, Inc), 337 B.R. 230 (D. Nev. 2005), the U.S. District Court for the District of Nevada extended this doctrine to trademarks.

The particular issues facing the court in Blanks were how to interpret the phrase 'applicable law' as it appears in '365(c)(1) and what was meant by the phrase 'the debtor,' which appears in the same section. In Blanks, the court decided that applicable law referred to the law of trademarks, and the court concluded that under 'applicable law,' a trademark license was not generally assignable as a matter of law, and thus not assumable in bankruptcy. The court suggested that the trademark owners had a significant interest in who used their mark, not only to protect the value of the goodwill generally, but because the owner typically has a right and obligation to 'control the quality of good sold under the mark.'

The second issue ' what is meant by the reference to 'the debtor' ' is rather esoteric to those of us who do not practice in the area. Under bankruptcy law, courts are sometimes faced with the issue of whether the Bankruptcy Code, in referring to 'the debtor' is speaking in terms of 1) the actual debtor in the case in question, or 2) alternatively, a 'hypothetical' debtor, thus ignoring the facts surrounding the actual debtor in the case under consideration. In Blanks, the court chose the latter route, thereby giving a very literal interpretation to the phrase 'the debtor' that appears in '365(c)(1). In other words, the circumstances of the case became, for the most part, irrelevant.

Blanks did not involve a franchise agreement as such, but since virtually all franchise agreements contain trademark licenses, the precedent clearly is noteworthy to the franchise bar. There may be elements of franchise arrangements that distinguish franchise agreements from other license agreements, but Blanks is certainly a shot across a bow for counsel who represent franchisees that want to assume their franchise agreements in their efforts to reorganize their companies or to sell off their franchise rights in liquidation. Note that while the problems presented by Blanks should in theory be equally applicable to franchisors that want to be able to assume all of their franchise agreements in the context of a bankruptcy proceeding, most franchise agreements give franchisors contractual rights to assign their interests in their franchise agreements, thus making the '365(c)(1) exception to '365's general conditional right of assumability inapplicable.

Repeated Failures to Comply with Franchise Agreement May Be Grounds for Termination Without Opportunity to Cure Under Illinois Franchise Disclosure Act

In addressing motions to dismiss made by a group of defendants, the U.S. District Court for the Northern District of Illinois (Eastern Division) found that the defendants' repeated failure to comply with federal and state wage and hour laws and their repeated failure to pay correct federal and state payroll taxes may be sufficient grounds for termination of the defendants' franchises without opportunity to cure under the Illinois Franchise Disclosure Act of 1987 (815 ILCS 705). Because the plaintiffs were not required to provide the defendants with an opportunity to cure their defaults, the defendants' motions to dismiss were denied, and the plaintiffs were permitted to proceed with their claims against the defendants. Dunkin' Donuts, Inc., et al. v. Tejany & Tejany, Inc., et al, (CCH Business Franchise Guide ' 13,250, Jan. 18, 2006).

The plaintiffs, Dunkin' Donuts, Inc., Baskin-Robbins USA, Togo's Eateries, Inc., and Dunkin' Donuts Realty, Inc., are franchisors of several different but related brands that permit joint development of multi-brand units referred to as 'combo' or 'trombo' shops. The defendants operated multiple Dunkin' Donuts shops, as well as several multi-brand combo and trombo shops. The plaintiffs alleged that 'for several years, the [d]efendants failed to comply with federal and state wage and hour laws by failing to pay their low-level store employees overtime rates' in violation of the Fair Labor Standards Act and the Illinois Wage Payment and Collection Act. The plaintiffs also alleged that, because of these violations, the defendants repeatedly failed to pay correct federal and state payroll taxes.

Based on these allegations, the plaintiffs contended that the defendants had failed to substantially comply with the terms of their franchise agreements, and that this conduct constituted grounds for termination. As a result, the plaintiffs terminated each of the defendants' franchise agreements, without giving them an opportunity to cure the alleged defaults, and filed suit against the defendants for breach of contract, Lanham Act violations, trademark infringement, unfair competition, and trade dress infringement by the defendants.

The defendants filed motions to dismiss, asserting that the plaintiffs did not allege grounds for termination sufficient under the provisions of the Illinois Franchise Disclosure Act. Section 705/19 of the Act requires a franchisor to have 'good cause' to terminate a franchise. Good cause is generally defined as a franchisee's failure to comply with the terms of the franchise agreement and to cure such failure within 30 days of receiving notice of default from the franchisor. Section 705/19 also provides several specific categories of defaults for which no cure period is required, including 'repeatedly fail[ing] to comply with the lawful provisions of the franchise or other agreement.'

The defendants contended that since they were not given an opportunity to cure their defaults, the plaintiffs must have relied, as the basis for the termination, on one of the specific categories of defaults for which no cure period is required. The defendants further contended that because the plaintiffs' stated grounds for termination did not fit within one of these specific default categories, they did not have sufficient grounds to terminate their franchise agreements, and their claims should be dismissed.

Addressing the motions, the court first cited several provisions of the franchise agreements that arguably were breached by the defendants' alleged wage-and-hour law and payroll tax violations, including a provision stating that the franchise agreements could be terminated without opportunity to cure if 'Franchisee is convicted of or pleads guilty or 'nolo contendre' to a felony … or any crime or offense that Franchisor believes is injurious to the System(s), the Proprietary Marks or the goodwill associated therewith, or if the Franchisor has proof that Franchisee has committed such a felony, crime or offense.' Because the defendants' violations could constitute defaults under their franchise agreements and because the plaintiffs alleged that the violations were repeated, the court found that the plaintiffs' complaint did show grounds for termination without notice and opportunity to cure under '705/19 of the Illinois Franchise Disclosure Act. Accordingly, the court found that the plaintiffs' claims could survive the defendants' motions to dismiss.

Rupert Barkoff is a partner in Kilpatrick Stockton LLP's Atlanta office, where he chairs the firm's Franchise Team. He is former Chair of the American Bar Association's Forum on Franchising. He can be contacted at [email protected]. Justin B. Heineman is an associate with Kilpatrick Stockton LLP in Atlanta. He can be contacted by phone at 404-685-6782 or by e-mail at [email protected].

Arbitration Award Set Aside, But Under Very Unique Circumstances

There are several reasons why both franchisors and franchisees like arbitration. One of them is finality. After the arbitration award is rendered, the likelihood of a successful appeal from the decision is minimal. But minimal and impossible are two outcomes that are nevertheless distinct, as demonstrated in the currently unreported decision, Twin Cities Galleries, LLC v. Media Arts Group, Inc. No. 02-2013 2006 WL 334908 (D. Minn., Feb. 13, 2006).

The salient issue in Twin Cities centered upon choice of law. The petitioners-franchisees apparently were located in Minnesota, and the respondents (a franchisor and its officers or directors) were located in California. The parties had selected by contract for California law to control. The arbitration panel decided that it would honor the contractual agreement and therefore refused to recognize the importance of the Minnesota Franchise Act, which expressly states:

[A]ny condition, stipulation or provision, including any choice of law provision, purporting to bind any person … acquiring a franchise … to waive compliance or which has the effect of waiving compliance with any provision of [the Minnesota Franchise Act] or any rule or order thereunder is void.

The arbitration panel consequently refused to hear certain evidence as to whether the relationship between the parties was a franchise and ultimately dismissed all of the franchisees' claims brought under the Minnesota Franchise Act.

The court hearing the franchisees' petition to vacate the panel's decision seemingly showed a significant reluctance to reverse the arbitration award in favor of the franchisor. Paying deference to the Federal Arbitration Act ('FAA'), the court refused to reverse the arbitrators' decision on any of the grounds enumerated in the FAA, which include corruption or fraud generally, partiality or corruption or misconduct by the arbitrators, or the arbitrators' exceeding their authority. The court noted, however, that there were at least three judicially developed reasons for setting aside an arbitrator's award. These included: 'complete irrationality,' manifest disregard of the law, and failure by the arbitrators to recognize a well-defined and dominant public policy.

The petitioners pressed three theories to warrant setting aside the arbitration panel's decision. The court found that the first argument ' manifest disregard of the law ' was not warranted under the circumstances. The arbitrators considered what the applicable law should be and ruled in favor of the parties' contractual choice: California. The arbitrators had also concluded that the FAA pre-empted the Minnesota Franchise Act's provisions. The court thus found that the issues were duly considered and was not willing to substitute its judgment for the judgment of the arbitrators.

The court also found that there was no misconduct by the arbitrators. Petitioners argued that the arbitrators' failure to hear all of the evidence regarding the issue of whether a franchise fee had been paid justified a reversal or rehearing. The court, however, disagreed, noting that the standard under scrutiny required bad faith, which had not been demonstrated by the petitioners as being present in the current case.

The court did, however, find attractive the argument that the Minnesota public policy justified a remand of the case. The ultimate disposition of Twin Cities was a function of the unique history of the Minnesota Franchise Act. Initially, the language italicized above was not included in the statute. In Modern Computer Systems., Inc. v. Modern Banking Systems., Inc. , 871 F.2d 734 (8th Cir. 1989) (en banc) (decided before the italicized language above was added to the Minnesota Franchise Act), the Eighth Circuit concluded that Minnesota's public policy to protect the interest of aggrieved franchisees was not sufficiently fundamental to overcome Minnesota's countervailing policy of enforcing parties' choice-of-law agreements. Subsequent to this decision, the Minnesota Legislature amended the Minnesota Franchise Act, as quoted above, to expressly state that choice-of-law provisions requiring the application of other state laws were void.

Thus, the court found the narrow basis to give the petitioners the relief they sought. The court ultimately ruled that the state of Minnesota affirmatively established an explicit, well-defined, and dominant public policy to protect Minnesota franchisees.

The peculiar circumstances of the case, as well as the narrow holding in favor of the franchisor, should not give franchisee advocates much comfort if their businesses are located outside of the confines of Minnesota. For those franchisees located in the warmer and kinder climates, Twin Cities will not likely affect their relationship with their franchisor, nor will their contractual relationships give them the same cushion of protection afforded to Minnesota franchisees. The case represents a victory for franchisees, but a narrow one at that. The case is currently on appeal.

Assumability of Trademark License Agreement Limited in Bankruptcy Environment

From the franchisor's perspective, a significant objective of almost all, if not all, franchise agreements is to control who the franchisee will be. Franchise agreements customarily have lengthy and often multiple provisions that will ensure that the ownership and operation of the franchise will be by an acceptable party. Typically, the franchise agreement will recite that the relationship with the franchisee is a 'personal' one and, consequently, the franchisee's interest, or that of its owners if the franchisee is an entity, cannot be transferred without the franchisor's prior written consent. In many cases, the franchisor is given the right to arbitrarily withhold its consent; in others, there are sufficient conditions on any transfer such that the franchisor may be anything but totally arbitrary in deciding whether to grant consent.

When a franchisee files for the protection of the bankruptcy courts, either under Chapter 7 (liquidation) or Chapter 11 (reorganization) of the Bankruptcy Code, the rules of the game and their effect may change. Bankruptcy courts and the bankruptcy setting can be creatures unto themselves, in that 1) the Bankruptcy Code provides a slightly different set of rules from the normal rules of contract on matters of enforceability; and 2) because of the importance of time in bankruptcy settings, the courts can often induce decisions simply by doing nothing for an extended period of time, forcing the parties to settle upon terms that might not have been acceptable in ordinary circumstances.

Many of the provisions in the Bankruptcy Code and the judicial decisions interpreting or applying the Code have traditionally favored debtors and given them a slight edge in the bankruptcy judicial setting. However, where issues of ownership and control of intellectual property (patents, copyrights, and trademarks) have been involved, the more recent judicial pronouncements have tipped the scale in favor of creditors, and in the franchisor-franchisee contexts, this has typically translated into franchisors.

As a matter of background, bankruptcy executory contracts (which typically would include franchise agreements) can be either assumed or rejected by the debtor. If they are assumed by the debtor, all of the defaults must be cured and adequate assurance of future performance must be provided. This general rule, however, has been held inapplicable in certain circumstances. Specifically, '365(c)(1) of the Bankruptcy Code states that the normal rule of
assumability does not apply if:

(A) Applicable law excuses a party, other than the debtor to such contract ' from accepting performance from or rendering performance to an entity other than ' the debtor in possession, whether or not such contract ' prohibits or restricts assignment of rights or delegation of duties; and

(B) such party does not consent to such assumption or assignment.' (emphasis added)

Under recent precedents, non-exclusive patents and copyright licenses have been construed as being non-assignable even if the two requisites described above (ie, defaults are cured and adequate assurance of future performance is provided) have been met because of the peculiar nature of the relevant intellectual property rights.

In N.C.P. Marketing Group, Inc. v. Blanks (In re N.C.P. Marketing Group, Inc), 337 B.R. 230 (D. Nev. 2005), the U.S. District Court for the District of Nevada extended this doctrine to trademarks.

The particular issues facing the court in Blanks were how to interpret the phrase 'applicable law' as it appears in '365(c)(1) and what was meant by the phrase 'the debtor,' which appears in the same section. In Blanks, the court decided that applicable law referred to the law of trademarks, and the court concluded that under 'applicable law,' a trademark license was not generally assignable as a matter of law, and thus not assumable in bankruptcy. The court suggested that the trademark owners had a significant interest in who used their mark, not only to protect the value of the goodwill generally, but because the owner typically has a right and obligation to 'control the quality of good sold under the mark.'

The second issue ' what is meant by the reference to 'the debtor' ' is rather esoteric to those of us who do not practice in the area. Under bankruptcy law, courts are sometimes faced with the issue of whether the Bankruptcy Code, in referring to 'the debtor' is speaking in terms of 1) the actual debtor in the case in question, or 2) alternatively, a 'hypothetical' debtor, thus ignoring the facts surrounding the actual debtor in the case under consideration. In Blanks, the court chose the latter route, thereby giving a very literal interpretation to the phrase 'the debtor' that appears in '365(c)(1). In other words, the circumstances of the case became, for the most part, irrelevant.

Blanks did not involve a franchise agreement as such, but since virtually all franchise agreements contain trademark licenses, the precedent clearly is noteworthy to the franchise bar. There may be elements of franchise arrangements that distinguish franchise agreements from other license agreements, but Blanks is certainly a shot across a bow for counsel who represent franchisees that want to assume their franchise agreements in their efforts to reorganize their companies or to sell off their franchise rights in liquidation. Note that while the problems presented by Blanks should in theory be equally applicable to franchisors that want to be able to assume all of their franchise agreements in the context of a bankruptcy proceeding, most franchise agreements give franchisors contractual rights to assign their interests in their franchise agreements, thus making the '365(c)(1) exception to '365's general conditional right of assumability inapplicable.

Repeated Failures to Comply with Franchise Agreement May Be Grounds for Termination Without Opportunity to Cure Under Illinois Franchise Disclosure Act

In addressing motions to dismiss made by a group of defendants, the U.S. District Court for the Northern District of Illinois (Eastern Division) found that the defendants' repeated failure to comply with federal and state wage and hour laws and their repeated failure to pay correct federal and state payroll taxes may be sufficient grounds for termination of the defendants' franchises without opportunity to cure under the Illinois Franchise Disclosure Act of 1987 (815 ILCS 705). Because the plaintiffs were not required to provide the defendants with an opportunity to cure their defaults, the defendants' motions to dismiss were denied, and the plaintiffs were permitted to proceed with their claims against the defendants. Dunkin' Donuts, Inc., et al. v. Tejany & Tejany, Inc., et al, (CCH Business Franchise Guide ' 13,250, Jan. 18, 2006).

The plaintiffs, Dunkin' Donuts, Inc., Baskin-Robbins USA, Togo's Eateries, Inc., and Dunkin' Donuts Realty, Inc., are franchisors of several different but related brands that permit joint development of multi-brand units referred to as 'combo' or 'trombo' shops. The defendants operated multiple Dunkin' Donuts shops, as well as several multi-brand combo and trombo shops. The plaintiffs alleged that 'for several years, the [d]efendants failed to comply with federal and state wage and hour laws by failing to pay their low-level store employees overtime rates' in violation of the Fair Labor Standards Act and the Illinois Wage Payment and Collection Act. The plaintiffs also alleged that, because of these violations, the defendants repeatedly failed to pay correct federal and state payroll taxes.

Based on these allegations, the plaintiffs contended that the defendants had failed to substantially comply with the terms of their franchise agreements, and that this conduct constituted grounds for termination. As a result, the plaintiffs terminated each of the defendants' franchise agreements, without giving them an opportunity to cure the alleged defaults, and filed suit against the defendants for breach of contract, Lanham Act violations, trademark infringement, unfair competition, and trade dress infringement by the defendants.

The defendants filed motions to dismiss, asserting that the plaintiffs did not allege grounds for termination sufficient under the provisions of the Illinois Franchise Disclosure Act. Section 705/19 of the Act requires a franchisor to have 'good cause' to terminate a franchise. Good cause is generally defined as a franchisee's failure to comply with the terms of the franchise agreement and to cure such failure within 30 days of receiving notice of default from the franchisor. Section 705/19 also provides several specific categories of defaults for which no cure period is required, including 'repeatedly fail[ing] to comply with the lawful provisions of the franchise or other agreement.'

The defendants contended that since they were not given an opportunity to cure their defaults, the plaintiffs must have relied, as the basis for the termination, on one of the specific categories of defaults for which no cure period is required. The defendants further contended that because the plaintiffs' stated grounds for termination did not fit within one of these specific default categories, they did not have sufficient grounds to terminate their franchise agreements, and their claims should be dismissed.

Addressing the motions, the court first cited several provisions of the franchise agreements that arguably were breached by the defendants' alleged wage-and-hour law and payroll tax violations, including a provision stating that the franchise agreements could be terminated without opportunity to cure if 'Franchisee is convicted of or pleads guilty or 'nolo contendre' to a felony … or any crime or offense that Franchisor believes is injurious to the System(s), the Proprietary Marks or the goodwill associated therewith, or if the Franchisor has proof that Franchisee has committed such a felony, crime or offense.' Because the defendants' violations could constitute defaults under their franchise agreements and because the plaintiffs alleged that the violations were repeated, the court found that the plaintiffs' complaint did show grounds for termination without notice and opportunity to cure under '705/19 of the Illinois Franchise Disclosure Act. Accordingly, the court found that the plaintiffs' claims could survive the defendants' motions to dismiss.

Rupert Barkoff is a partner in Kilpatrick Stockton LLP's Atlanta office, where he chairs the firm's Franchise Team. He is former Chair of the American Bar Association's Forum on Franchising. He can be contacted at [email protected]. Justin B. Heineman is an associate with Kilpatrick Stockton LLP in Atlanta. He can be contacted by phone at 404-685-6782 or by e-mail at [email protected].