Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Finding Balance in Franchise Agreements

By Kevin Adler
May 30, 2013

“Any notion that granting a franchise is a privilege needs to be struck from the conversation. We are not commodities. We are partners, and a franchisor has the obligation to help us succeed,” stated multi-brand franchise operator Aziz Hashim during the opening panel discussion at the IFA's 46th Annual Legal Symposium in Washington, DC, in May.

This assessment came as Hashim and co-panelist Kenneth D. Walker, CFE, the past IFA Chairman of the Board and a former CEO of Driven Brands, Inc. (franchisor of Meineke Car Care Centers), reflected on today's hot-button issues in the franchisor-franchisee relationship. With moderator Joel Buckberg, of counsel with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Hashim and Walker discussed everything from roadblocks for successful operators to sell their franchises, to proper use of advertising funds, to whether franchise executives should appear on the TV show “Undercover Boss.”

While Hashim and Walker represent, to some degree, opposite sides of the spectrum, they agreed on the bottom-line imperatives for the industry's future success: clarity and transparency in franchise contracts, fair handling of conflicts, and a sense of genuine partnership. “There's a misconception that only franchisors are stewards of the brand. It's not true; franchisees are very interested in the success of the brand and the [language of the] contract as well,” said Hashim.

Getting the relationship right is more important than ever because franchisors are working with sophisticated, multi-brand operators that have a wide choice of where to invest their capital. “It's about core values and a vision,” Walker said. “Make sure you have a vision of what the business should look like to customers, and stay with it. This starts before the franchisee training program and even before the franchise sales cycle. And it doesn't end with training, either. In magazine articles, at your conventions ' everywhere ' you must be consistent in your concept.”

Working Together for Growth

Use of advertising funds is one area in which a franchisor can build a relationship with franchisees through consultation, said the panelists. “There's no right way to manage an ad fund,” said Walker. “Some brands benefit from robust television advertising, but others do not, and might be effective with couponing. Some are better on social media.”

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

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.

The Article 8 Opt In Image

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.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.