Franchising Licensing and Distribution

Overview

McDonald Hopkins’ Franchising, Licensing, and Distribution team combines years of experience representing franchisors and franchisees with expertise in the numerous legal areas that impact every aspect of operating in the franchise industry – providing franchisors and franchisees across the country with the business counseling and legal guidance they need to plan, form, administer, and work through successful long-term business relationships. Our attorneys have provided counsel to some of the nation’s biggest players in the franchise industry, and served as outside counsel to numerous big-name franchisors and franchisees. This knowledge and experience working with clients on both sides of the table gives us unique insight into the challenges that franchisor and franchise owners face and helps us guide our clients through purchasing, establishing, building, restructuring, or selling their franchise business. We also frequently counsel clients on franchise disclosure documents, franchise agreements, area development agreements, gift card programs, leases, financing transactions, licensing and trademark matters, royalty payments, franchise disputes, liquor law matters, and distribution matters.

If you hit any bumps in the road, our team has the experience you need with enforcement and dispute resolution through out-of-court workouts, federal and state court litigation, arbitration or mediation. We also have experience working with financially distressed franchisors and franchisees in workout and financial restructuring transactions, and have represented franchisors, franchisees, and buyers in numerous Chapter 11 bankruptcy cases throughout the country. Our team has specific expertise working with clients in the restaurant industry and significant experience representing lenders in franchise restructuring matters, including lenders that wish to credit bid their debt to purchase a franchise business. We also represent buyers and sellers of franchised businesses in traditional and financially distressed merger and acquisition transactions.

The many services we provide to our franchise, licensing and distribution clients include:

Start up and relationship planning
Tax planning, both state and federal
Termination Rights
Intellectual property protection and planning
Drafting of agreements
Franchise registration and disclosure
Finance and secured transactions
Real property related issues
Litigation
Compliance with federal and state antitrust laws and laws governing unfair competition
Operational and Debt Restructuring
Business relationship counseling, including structure and internal “partnership” disputes
Mergers and acquisitions
Employment law counseling
Employment litigation, including federal and state wage/hour and discrimination claims
WARN Act
Union avoidance training
Employee benefits advice and counseling, including Affordable Care Act issues
ERISA litigation
Data security breach prevention, planning, and counseling
Liens under the Perishable Agricultural Commodities Act
Defending patent infringement allegations and negotiating patent licensing arrangements
Preparing and filing for patent protection
Right of publicity clearance and licensing
Trademark protection and policing

Franchisors

McDonald Hopkins provides new and existing franchisors with insightful legal guidance on the important documents that are necessary to establish, maintain, and grow a franchise business. We advise on drafting franchise documents and complying with state and federal regulations governing these documents, including franchise disclosure documents, franchise agreements, and area development agreements. It is important that franchisors are aware of the impact of the FTC Franchise rule, and McDonald Hopkins advises its clients on maintaining the proper documentation required to be provided to potential franchisees. In addition, at the state level there are various franchise registration, filing, disclosure, and relationship laws that are imposed on franchisors – and all of these laws vary state-by-state. We help our franchisor clients navigate these laws and regulations, in addition to providing counsel on labor and employment matters, cybersecurity issues, intellectual property, and general business counseling matters.

Franchisees

Whether a client operates a single franchise or manages multiple locations across several states, our team can advise and provide assistance on the review and negotiation of franchise disclosure documents, franchise agreements, leases for real property and equipment, and financing documents. We also advise franchisees on labor and employment matters, tip-credit laws, joint-employer laws, cybersecurity issues, intellectual property, and general business counseling matters.

Liquor Laws

Our Franchising, Licensing, and Distribution team advises restaurants, franchise businesses and distributors in connection with state liquor laws, permit applications, transfers and violations. For clients working to buy or sell a franchise, we assist in structuring transactions to mitigate risks of enforcement actions and to ensure there is no disturbance in liquor service. If you are a restaurant owner looking to expand or build a new location, we can assist in due diligence for site selection, and review and advise on election laws to change the liquor permit requirements of a jurisdiction. We also review importing and distribution rules to assure that our clients comply with applicable laws.

Intellectual Property and Licensing

Intellectual property, branding, and licensing are important and sometimes overlooked business challenges when it comes to operating within the franchise industry. Our franchise, licensing, and distribution team includes attorneys with extensive intellectual property experience who can advise clients with respect to building, maintaining, enhancing, and protecting their brands and intellectual property under U.S. and international law. We work with clients in connection with the licensing of their trademarks, copyrights, and patents. When it comes to intellectual property litigation matters, we proactively help clients avoid problems before they arise by conducting full and preliminary trademark, copyright, and patent clearance searches, providing clearance opinions, and utilizing other litigation avoidance techniques.

McDonald Hopkins can also assist clients in FDA-regulated industries – including food, beverage, nutritional supplement, cosmetic, drug and medical companies – with understanding the effect FDA and FTC compliance issues have on intellectual property strategy. This includes understanding FDA regulatory compliance, including labeling and good manufacturing practices (cGMPs). We provide dispute resolution advice to clients in this space, and have successfully defended clients in these industries against claims for patent and trademark infringement, and false advertising and unfair competition under the Lanham Act and state laws in both the federal courts and the ITC.

Distribution

McDonald Hopkins advises franchisors, manufacturers, wine and liquor companies, and others who use third party relationships as a distribution mechanism. We have experience in working with all aspects of vertical distribution and all vertical distribution formats, including franchising, dealership and distributorship programs, sales representative and commercial agency relationships, commercial licensing and co-branding arrangements, management agreement formats, and direct selling and business opportunity relationships.

Experience

Successful representation of food truck operators as tenants in connection with leasehold disputes with landlords, including negotiating favorable leasehold-buyout terms and pursuing breach of covenant of quiet enjoyment rights.
Counsel to a franchisor and operator of over 70 casual dining restaurants located in 20 states and Canada in an out-of-court restructuring.
Counsel to a multi-unit franchisee of Five Guys Enterprises, LLC in a chapter 11 bankruptcy case.
AppleILLINOIS; counsel for the DIP lender and pre-petition lender to an owner of 33 Applebee’s restaurants in a chapter 11 bankruptcy case.
Duke and King Acquisition; debtor’s counsel to a franchisee of 92 Burger King restaurants sold in a chapter 11 bankruptcy case.
Debtor’s counsel to a franchisee of 140 KFC restaurants sold in a chapter 11 bankruptcy case.
CCI of West Palm; debtor’s counsel to a franchisee of 19 TGI Friday’s restaurants sold in a chapter 11 bankruptcy case.
Representation of a competing bidder in a chapter 11 auction sale for Flat Top Grill’s casual dining restaurants.
Big Buck Brewery & Steakhouse; counsel to the debtor in a chapter 11 reorganization of the franchisor.
Counsel to a new franchisee of certain fast casual restaurants.
Handling the defense of a federal court FLSA class action lawsuit primarily alleging unpaid wages and overtime for a fast food franchisee with multiple locations. The matter was hotly contested. We were able to limit the amount of the class members and eventually negotiated a resolution that was favorable to our client.
Outside general counsel to a multi-unit franchisee of Applebee’s with locations in multiple states.
Counsel to an owner and operator of multiple southwestern grill restaurants in an out-of-court restructuring.
Counsel to a franchisee of 45 casual dining restaurants in an out-of-court workout with its lenders.
Counsel to an owner-operator of 19 casual dining restaurants in a workout with its lenders.
Representation of an owner of 43 casual dining restaurants with respect to the sale of his stock.
Counsel to one of the largest franchisees of a national doughnut chain in an out-of-court workout.
Counsel to the franchisor of a national frozen yogurt chain.
Counsel to one of the world’s largest franchisors with respect to intellectual property and patent issues.
Counsel to franchisee in the acquisition of multiple franchise locations.
Counsel to franchisors and franchisees in various cybersecurity matters.
Counsel to a new franchisee of a restaurant chain specializing in chicken wings
Counsel to a franchisee of a basement waterproofing company in connection with a franchise agreement dispute
Counsel to a franchisee of a national seafood restaurant chain
Counsel to multiple franchisees listed in the IFA’s top 200
Structure of arrangements between furniture suppliers and retailer for supply and finance