Franchise and Distribution

This practice group falls within the Frost Brown Todd Regulated Business Practice Group. Like banking and insurance, as well as other federal and state regulated businesses, franchise concerns must constantly comply with the ever-changing administrative rules from the Federal Trade Commission and the 14 states that regulate franchising within their borders. Our practice section not only keeps these clients in compliance but works with them in all aspects of their businesses. Listed below are some of the areas we cover:

Compliance with Franchise Disclosure/Registration Requirements

  • We counsel our clients to insure they are compliant with the pre-sale disclosure and other requirements regarding franchises and franchise agreements under both Federal Trade Commission rules and various state law requirements
  • We can coordinate with counsel in foreign countries, many of whom already have a working relationship with Frost Brown Todd, as to international franchise requirements
  • We prepare franchise disclosure or registration documents, franchise agreements and trademark licensing agreements in such industries as restaurants, food service, convenience stores, clothing, home furnishings, footwear, formalwear, automobile repairs, diet counseling and maid services

Franchise and Dealer Termination Issues

  • Special dealer termination laws have also been enacted at the federal level, such as the Automobile Dealer Franchise Act requiring that automobile manufacturers act in good faith when terminating dealer franchises. State statutes often limit or purport to limit termination of dealers in various well-known industries such as beer, wine, farm equipment and automobile dealerships. Some states have enacted statutes governing termination of any dealer or "franchise" relationship. We can furnish a quick evaluation of a franchise/dealer termination situation, including analysis of the reasons for termination, review of the written franchise/dealer agreement, evaluation of potential antitrust issues, assessing potential franchise/dealer protection statutes, consideration of potential for common law contract or tort claims and analysis of damages or available remedies.

Litigation and Dispute Resolution

We represent franchisors, franchisees, suppliers and dealers, in all aspects of terminations in federal and state court and in arbitrations and mediations. We defend or prosecute related claims such as:

  • False earnings
  • False promises of franchisor buyouts of failing franchisees
  • Terminations in violation of state dealer termination statutes
  • Uniform Commercial Code (UCC), contract law or promissory estoppel
  • Improper restrictions on the sale or transfer of dealerships or franchises
  • Establishment of supplier-owned or franchisor-owned businesses within dealers' or franchisees' market areas thereby constituting unfair competition
  • Failure to arbitrate pursuant to a binding arbitration clause
  • Vertical and horizontal price-fixing and tie-in antitrust claims

Franchisee Associations and Related Issues

We represent franchisee associations in connection with general formation and operational matters, including the preparation of articles of incorporation and bylaws and amendments thereto, the establishment of programs for association members such as group insurance coverage, telecommunications contracts, marketing working groups and related areas.

We represent both franchisors and franchisees (including franchisee associations) in various complex issues including the development of policies for the expansion of franchise systems, the impact of the development of alternate distribution channels on franchisees, franchise system advertising and marketing policies and fund administration, advertising cooperative arrangements, and franchise dispute resolution mechanisms.

We are involved in all aspects of franchisee association disputes and litigation.

Franchise System Purchasing Organizations

For many years Frost Brown Todd has been involved in the formation and operation of purchasing cooperatives and other organizations seeking to organize and improve upon the supplier and distribution arrangements serving franchise and distribution systems. Our experience includes the formation and representation of a purchasing co-op which is responsible for the domestic purchasing of one of the largest quick service restaurant franchise systems.

Franchise Business Transactions

The attorneys in the Franchise Section also regularly assist franchisees and franchisors in selling their restaurants, hotels, dealerships, etc. In addition, we give advice on financing and re-financing the franchised units.

Legal Spotlight

Helping Leap Frog® brands grow by leaps and bounds

Leap Frog Enterprises recently hired FBT to advise and assist in selecting and administering a strategic licensing  relationship to grow its famous brands of children's learning aids.

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