Practice Areas

• Franchise Law

Representing franchisors and franchisees across the nation and world-wide. From large and well-established to small and starting-up.

Structuring and drafting franchise agreements and legally required disclosure materials;
Complying with state and federal franchise and business opportunity laws including preparing registration materials;
Selecting, registering, and protecting trademarks;
Enforcing franchise agreement provisions and managing relationship issues with franchisees and franchise prospects;
Resolving disputes with franchisees and other third parties;
Overseeing mergers and acquisitions; and
Sorting out advertising issues.

Legal and practical advice on a variety of alternatives to franchising. Some business relationship arrangements may allows companies to implement licensing or distribution strategies without falling under the strict franchise disclosure and registration requirements.

Experienced in resolving franchise disputes before litigation, representing both franchisors and franchisees in franchise purchase negotiations. Assist both franchisors and franchisees through transfer, renewal, and termination processes. Well versed in related antitrust, securities, real estate, employment, estate planning and general business matters.

epresent franchisees selling their franchises or purchasing additional franchises. We review provisions of the franchise agreement and disclosure document related to sale of the franchise, including issues such as:

The conditions for the franchisor’s approval of the transaction;
Whether or not the franchisor has a first right of refusal to purchase the business and whether or not the franchisor has waived that right;
The payment of a transfer fee to the franchisor; and
Other franchise-related issues.

Preparation of sales documents, including the letter of intent or earnest money agreement, contract of sale, promissory note, confidentiality agreement, ongoing training or consulting agreement, Uniform Commercial Code Financing Statement, and other related documents as applicable. Simple and concise explanations of legal and practical aspects of the business sales process.

Experience in franchise dispute resolution. We review franchise documents for franchisees and represent franchisees in settlement negotiations with franchisors. We are familiar with state franchise relationship laws in various states that may trump inconsistent terms in a franchise agreement in areas such as franchise termination, franchise renewal and covenants against competition. If a dispute escalates, we help manage the mediation, arbitration, or litigation processes and seek to enforce our client’s rights and retain a fair recovery.

Help franchisees obtain favorable resolutions to their franchise-related problems, including rescission of the franchise agreement; return of initial franchise fees; recovery of additional fees and costs; and compensation for other injury or damages.

Review and investigate franchise systems in conjunction with the representation of prospective franchise purchasers, existing franchisees selling their franchise businesses, and franchisees desiring to otherwise exit their franchise businesses.

• Business Law

Tools and knowledge to help you start and preserve your business and your legal entities.

Create business entities, such as limited liability companies and corporations, for franchise clients. Operating a franchise system or business through a business entity can help protect personal assets from claims brought by third parties. Operating through a business entity may also have tax advantages.

Talk to an accountant about the type of business entity that should be formed (e.g. LLC versus corporation) based on each client’s specific financial and tax situation. We then prepare all documents to formally organize the company. Business entity organizational documents may include:

LLC Articles of Organization for an LLC or Articles of Incorporation for a corporation. This document is submitted to state authorities to officially form the company.
Operating Agreement for an LLC or Bylaws for a corporation. This document establishes the structure of the company in regard to ownership, management, transfers of ownership interests, withdrawal of an owner, dissolution of the entity, and other issues.
Other documents as needed (such as initial organizational resolutions or meeting minutes, stock subscription agreements, stock certificates, etc.).

• Mediation

Mediation is a tool that is often used successfully to resolve conflicts. Doug offers mediation services to facilitate settlement of franchisor/franchisee disputes. Mediation is an ideal setting in which the parties can come to the negotiation table without the intimidations and vagaries of the court or arbitration processes. Through the non-binding and confidential mediation process, an experienced and knowledgeable franchise attorney who can help parties reach a settlement that everyone can live with. Mediation can be part of a required settlement process outlined in a franchise agreement or as a voluntary decision made by the parties. Doug has extensive experience in franchise-related issues.

Through mediation, a franchise law attorney is hired by the parties to serve as mediator. Although an attorney, the mediator does not represent either party. Instead, the mediator’s role is to assist the parties with reaching a resolution by applying knowledge and experience to the parties’ circumstances and affording each party an informed and neutral perspective its position and options for resolution. Parties may mediate franchise law matters in different settings. They may each be unrepresented by an attorney and may hire a mediator to work directly with them. On the other hand, they may each be represented by an attorney and may mediate with the assistance of both their attorneys and the mediator. Or, they may mediate through a court-ordered mediation program with a mediator provided by the court. Regardless of the setting, the mediator’s informed and neutral perspective often proves invaluable in enabling the parties to reach a resolution.”

• Sports Leagues

Many sports leagues are multiple-owner associations where an executive committee of owners and a commissioner make decisions for the group. The major decisions are ratified by the owners’ vote according to league Bylaws. Basically, the owners actually own the league and the league’s marks, logos, operations, etc.

Although most major sports leagues follow the multiple-owner association model, there is little judicial precedence as to whether the multiple-owner association is exempted or excluded from state and federal franchise disclosure laws. In an Indiana court case, the CBA (Continental Basketball Association) was considered a franchise system and was required to comply with Indiana’s state franchise disclosure law.

Doug advises team management and owners on the appropriate structure and steps necessary to protect and properly deal with team assets. These assets include:

team names, marks, logos, and slogans;
revenues from games, ticket sales, and sponsorships;
team’s players and other personnel;
equipment, supplies, and facilities.
Doug counsels team management and owners on rights and obligations related to and prepare and draft the following:

licensing and employment contracts;
league participation and ownership contracts;
sponsorship and advertising agreements;
lease agreements and purchase agreements for property and real estate.

Awards

Contact Douglas Smith