Franchise and Distribution

Frost Brown Todd lawyers are proven leaders in the franchise and distribution industry.  Franchise and distribution companies must constantly comply with not only the federal rules promulgated by the Federal Trade Commission but also the state laws that regulate franchising within their borders.  With a practical approach to problem solving, we know how to balance the legitimate business objectives and expectations of all parties in the franchise and distribution relationship.  Whatever business problems arise for our clients – from structuring the franchise to the organization of a purchasing organization – FBT can help you achieve your goals by crafting innovative financing and operational solutions.

Compliance with Franchise Disclosure/Registration Requirements

We counsel our clients to ensure they are compliant with the pre-sale disclosure and other requirements involving 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, including 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

Frost Brown Todd is the foremost leader in franchise and distribution industry as it relates to franchise system purchasing organizations. We have designed and formed purchasing organizations for many national restaurant systems, including several quick service restaurant chains and the first ever purchasing cooperative for a casual dining restaurant system.  We have also advised a substantial number of other franchise system purchasing organizations concerning everything from cooperative tax and antitrust issues to system wide distribution arrangements, to supply chain visibility software. 

Franchise Business Transactions

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

Procurement and Distribution Agreements

Frost Brown Todd has extensive knowledge in the negotiation and drafting of procurement and distribution agreements for many different products. On behalf of companies and purchasing organizations of all sizes in diverse industries, we facilitate the evaluation, development and implementation of system specific standardized forms of procurement as well as supply and distribution agreements.