Franchising World, March 2007

By Lane Fisher

The International Franchise Association’s Legal Symposium Task Force, which consists of roughly 50 percent in-house and 50 percent outside attorneys, has gone to great lengths to revamp and improve the 2007 Legal Symposium and distinguish it from similar programs. While no name change is planned, consider the new Legal Symposium as the “Business” Legal Symposium, because the topics and panelists were selected to ensure that current legal issues are discussed in the actual business context in which they arise.

“Rather than reporting changes in the law and then exploring how they might implicate a franchise company, these programs will first study the business issue, and then analyze how the law impacts those decisions” says Kevin Hein of Snell & Wilmer, “in order to give the a more informed understanding of the interplay between the legal requirements and the practical business dictates faced by franchisors and franchisees in their daily operations.” 

“Most, if not all, topics will be covered in a way designed to give the non-lawyer franchise executive real value on the business ramifications of the legal issues being addressed,” notes Larry Weinberg of Cassels Brock. “With in-house attorneys involved in virtually every session, and business executives on many panels, the IFA Legal Symposium should provide the perfect bridge between business issues and the law,” says Dawn Diaz, general counsel of Planet Beach Franchising Corp. “The new structure and content will appeal to a broader audience and is the obvious choice for in-house attorneys who have a limited budget.”

The Program

In 2007, the program will feature a variety of business topics relevant to franchise systems in any lifecycle stage. Topics will focus on advanced legal issues featuring expert franchise attorneys, as well as savvy business executives who will share their insights about how the legal and regulatory issues being discussed affect the way they operate their franchise systems. Their perspectives will be instrumental in helping attendees understand how to protect and strengthen the systems they represent.

In addition, a Basics Track makes a return appearance for those who are new to franchising and those in need of a refresher course. Particularly valuable for franchise administrators and paralegals, the Basics Track is a traditional 101 course that provides attendees with the nuts and bolts of franchise law.

The Plenary Sessions

General sessions will also focus on topics with both the legal professional’s and business executive’s needs in mind. The sessions will open with a private-equity transaction case study called “Getting the Deal Done.” Program planners recognize that private equity is becoming more and more the norm in ensuring the continued longevity and success of a franchise system. Join attendees May 7 for a closer look into a recent private-equity deal between The Dwyer Group and The Riverside Co. Executives from both parties will discuss the transaction, revealing the legal and business challenges that were considered and ultimately overcome. 

During a lunch, legal experts and high-level regulators will discuss the release of the long-anticipated Federal Trade Commission’s Franchise Rule. Following lunch, Haynes Boone Partner Jan Gilbert will coordinate the “Ask the Regulators” session, where attendees can ask specific questions of FTC Franchise program Coordinator Steve Toporoff, Assistant Attorney Gen. of the Maryland Attorney Generals’ Division of Securities Dale Cantone; and chief of the Franchise Bureau of the Illinois Office of the Attorney Gen., Bob Tingler; and Kaufman Feiner Yamin Gildin & Robbins Partner David Kaufman about the new rule or other regulatory matters.

On May 8, the Judicial Update will present leading franchise attorneys who will review the year’s most important cases and developments in franchise law and how they affect the everyday business operations.

Highlights from the Concurrent Sessions

Many systems operate dual distribution systems. Friendly’s Ice Cream Corp. Vice Pres. and Gen. Counsel Robert Sawyer, coordinator of the session on managing conflicts of interest in franchise systems which operate company owned locations, says to “Be careful not to create unintended traps for the unwary. A decision made primarily for the benefit of the company and its units will not be received well by franchisees that don’t enjoy that same benefit. A double standard, even if reasonably based, will be viewed as inherently unfair. We will explore a number of concerns that franchisors must address in order to avoid actual or perceived conflicts of interest.”

At more of these conferences, franchise companies are discussing benchmarking unit performance and the most efficient means to share that information with the franchising community and use it to teach and exploit market efficiencies. On the benchmarking panel, AAMCO Transmissions Pres. Todd Leff, KFC Vice Pres. and Associate Gen. Counsel Scott Toop and CertaPro Painters Pres. Charlie Chase will share what they have learned about collecting, distributing and using information for the collective benefit of a system and across brands. 

As franchise systems seek ways to increase their client base and resulting revenue streams, they are more frequently turning to marketing programs such as gift cards,sweepstakes, contests and customer loyalty programs to achieve their objectives. Each of these concepts is fraught with potential legal traps for the unsuspecting. According to session coordinator and Kilpatrick Stockton Partner Rupert Barkoff, the contests, sweepstakes and gift card program will provide a heads-up primer to the legal issues that arise with each of these. 

Many of the fastest-growing companies use traditional and unique forms of Item 19 earnings claims in their UFOC. In the earnings claims session, the presenters intend to go far beyond the variety of gross-sales claims. According to session coordinator and Faegre & Benson Special Counsel Mary Beth Brody, “The session will allow franchise executives and attorneys an ability to collaborate on the kind of information prospects find meaningful and focus on creative ways to analyze, present and use financial data.” 

 “Contrary to the myth, a franchise advisory council and independent franchisee associationscan actually be a benefit to a franchise system,” says AAMCO Transmissions Vice Pres. and Gen. Counsel William Jameson, the session coordinator on the value of such entities. Jameson will appear on the panel with UPS Stores Senior Franchise Counsel Rich Kolman and Chernow Katz Attorney Harris Chernow to explore the effective use of the associations and how to get the most from each.

Who isn’t talking about multi-unit franchising? Weinberg, who is coordinating the session on “Alternatives to Single-Unit Franchising,” recruited such speakers as Burger King Vice Pres. and Assistant Gen. Counsel Craig Prusher to specifically address the business issues, and not just the legal issues that will help a franchise system decide if and what type of multi-unit expansion model may work for them.

Kaufman Feiner Partner David Oppenheim, the coordinator of basics track session on drafting franchise agreements says that aside from covering the basics, the speakers will address two issues of particular interest to the franchising community: drafting comprehensive franchise agreements that clients can actually sell to prospective franchisees in a competitive environment and agreements for dynamic franchise systems to provide for flexibility to implement changes in the system over time. Presenting the program will be La Quintas Inns Vice Pres. and Assistant Gen. Counsel Robyn Fuller and Snell & Wilmer Partner Jenni Wisniewski.

The Legal Symposium has always attempted to define the ethical boundaries within which franchise lawyers must practice. Session coordinator Nixon Peabody Partner Arthur Pressman will moderate the workshop on “Current Ethical Issues in Arbitration and Mediation” with McDonald’s Managing Counsel Bradley S. Block and CPR Institute Senior Consultant Cathy Cronin Harris. Making the most of alternative dispute resolution requires counsels, mediators, arbitrators and business executives to understand the ethical limitations on all participants. All’s fair in love, war and ADR? Not exactly. Hear from three veterans with different positions in the ADR equation (client, outside counsel, mediator) as they discuss some of the ethical issues they face every day in their practices.

Franchise companies are constantly testing the limits of their operations manuals in effectuating system change. Wiley, Rein & Fielding Partner Benjamin Reed expects this session to “provide insight on how several of the largest and most successful franchisors have used their operations manual as a tool for effectuating system-wide changes that allowed their franchise systems to remain competitive in the face of a constantly changing marketplace.” Bryan Cave Counsel Brian Cole, formerly with Pizza Hut, will moderate a panel consisting of H&R Block Senior Vice Pres. Ken Treat, CFE, and Subway attorney Dara Solan.

Franchise companies generally recognize that their brand is always subject to or under attack by pirates and infringers on the Internet. In a session on “Defending Against Guerrilla Cyber-Assaults: Protecting Your Brand on the Internet,” the task force has enlisted Jennifer Elgin and Stephen Selznick, two experts on the legal aspects of brand protection; and VeriSign Product Mgr. Victor Buonocore, who works with companies to protect their brands in cyberspace. This session will offer participants the opportunity to discuss and learn about the numerous ways their brand may be misused or even hijacked on the Internet, the types of technology that can help monitor for and prevent against misuse, and the legal mechanisms available to protect valuable intellectual property.

In light of recent highly-publicized outbreaks of the E. coli virus impacting several quick-service restaurant chains, the session “Preventing Supply Chain Disputes: Best Disclosure and Contract Practices” is especially timely in examining supply-chain challenges facing franchise systems. This session, which brings together three experienced speakers with varied backgrounds, will go beyond traditional structural and disclosure issues and examine practical insights in managing system-wide suppliers and limiting the damage associated with such crises.

Many people say that strong communication is one of them most important elements of a successful franchise relationship. In an effort to highlight the practical business issues which arise on both sides, session coordinator and International Dairy Queen senior attorney Kerry Olson decided to add balance to her program on “Turning the Ship Around: Managing Relationships to Address Franchisee Unrest” by asking Brookside Consulting Managing Partner Steve Siegel, who was the first franchisee IFA chairman and served in the food-service and floral industries, to speak alongside of Holmes & Lofstrom Partner David Holmes and Sonnenschein Nath & Rosenthal Partner Rochelle Spandorf and UniShippers Chairman, Pres. and CEO Steven Nelson.

According to session coordinator Kevin Hein, “the franchisor assisted resale program explores the business reasons that have compelled franchisors to establish franchise resale programs. Beyond reviewing the same old compliance topics, this session focuses on the hard issues faced by the franchise sales department in crafting and effectively implementing a franchise resale program.”

As systems grow, they no doubt face opportunities with franchising internationally. In a program coordinated by Marriott Vice Pres. and Assistant Gen. Counsel Mark Forsyth, who says, “the program on avoiding problems and pitfalls in international franchise agreements is going to be ‘must attend’ for attorneys and business persons alike who have an interest in international franchising. We are fortunate to have three experts (one from the United Kingdom, one from Mexico and one from Down Under) to provide practical insight into the issues affecting franchisors doing business in a variety of jurisdictions. The session will address the questions you should be thinking about before entering a new jurisdiction, deal structuring issues, different approaches to civil code countries, implications of governing law and the affect of foreign legal systems on the franchisor’s ability manage the system and enforce its contracts.”

Based on all the discussions occurring around the world about doing business in China, UPS Stores Vice Pres. and Gen. Counsel Debra Abate recruitedLehman, Lee & Xu Senior Partner Richard Wageman from its Beijing, China office to speak on the panel. Abate recommends that attendees bring hard questions about China to this session.

The exchange of information is paramount in keeping up to date on what is occurring in the world of franchising. And that’s why the symposium will also offer interactive roundtable discussions, two networking receptions and multiple refreshment breaks so attendees can meet with other franchise professionals from many backgrounds. The course materials also will receive an overhaul as in-depth examinations are underway and actual examples of contracts, forms, tables and charts that are used in business operations will be included.

Need more reasons to invest your time and money to participate in the Legal Symposium? It is an opportunity to earn a large block of credits toward Certified Franchise Executive accreditation–300 core/elective credits to be exact. For attorney members, this is a good time to earn Continuing Legal Education credit. 

Lane Fisher is partner of Philadelphia-based law firm FisherZucker LLC. He can be reached at lfisher@fisherzucker.com.