Franchise and Distribution Law and Litigation
Nelson Mullins is experienced in representing regional, national, and international franchisors, distributors, and multi-unit franchisees. The Firm’s franchise and distribution clients range from start-up companies to large, established franchisors, and cover a variety of industries including restaurants and food service, hotel and hospitality, vehicle manufacturers and distributors, real estate brokerage, tax preparation services, retail stores, commercial office cleaning, health-related services, amateur and professional sports leagues, and other commercial and consumer-based services.
Nelson Mullins’ broad experience in many legal disciplines allows us to provide advice and counsel covering the full range of legal needs for our clients in the franchise and distribution industries. The Firm is experienced in all areas of franchise law, including developing and modifying franchise systems, drafting franchise disclosure documents and agreements, franchise regulatory compliance, and franchise litigation. We also provide franchise and distribution clients with a range of other business law services in the areas of corporate, employment, intellectual property, and real estate law. Nelson Mullins' experience includes the following:
Franchise Development and Regulatory Compliance
- developing and modifying a franchise or distribution system;
- drafting, negotiating, and modifying franchise agreements, license agreements, multi-unit and area development agreements, area representative agreements, and distribution agreements;
- drafting and modifying franchise disclosure documents;
- handling state franchise registrations;
- counseling on the availability of franchise exemptions and exclusions;
- advising on other federal and state franchise regulatory and compliance issues, including compliance with the FTC’s Franchise Rule, state franchise relationship laws, and state motor vehicle dealer and heavy equipment dealer laws; and
- counseling on and negotiating agreements for international franchising and distribution.
Business Counseling and Transactions
- registering trademarks and protection and licensing of intellectual property;
- providing antitrust compliance and advice;
- structuring and documenting business transactions, including mergers, acquisitions, and sales of franchise businesses and assets;
- handling labor and employment issues;
- handling site acquisition and leasing;
- providing legal and strategic counseling to international auto manufacturers/distributors regarding drafting and enforcement of agreements with dealers, establishment and relocation of dealerships, and other dealer issues and programs; and
- handling other business matters, including purchasing and supply, advertising, privacy and data security, and social media issues.
Litigation and Dispute Resolution
Nelson Mullins’ litigation experience includes:
- litigating and arbitrating franchisor claims against franchisees to recover franchise fees and liquidated damages, to enforce franchise terminations and enjoin trademark and trade dress infringement by holdover franchisees, and to enforce restrictive covenants, trade secret rights, system standards, and other franchise agreement obligations;
o including obtaining temporary restraining orders and preliminary injunctions where appropriate;
- defending against franchisee claims, including those alleging wrongful termination, breach of franchise agreement obligations, fraud, franchise disclosure violations, violations of state franchise laws, encroachment claims, and unfair and deceptive trade practices;
- defending against vicarious liability claims alleged by franchisee employees or third parties against a franchisor;
- defending class action lawsuits against franchisors and distributors;
- representing car, truck, and other motor vehicle manufacturers in civil and administrative litigation against motor vehicle dealers, including under state motor vehicle dealer statutes;
- litigating and arbitrating employment claims and business claims;
- conducting arbitration, mediation, and other forms of alternative dispute resolution;
- protecting franchisor rights in bankruptcy proceedings, including litigation related to obtaining relief from the automatic stay to terminate franchise agreements, compelling or objecting to assumption or rejection of franchise agreements, and objecting to reorganization plans.
Nelson Mullins is a member of the International Franchise Association. Our attorneys are members of the American Bar Association Forum on Franchising.
The following are representative examples of engagements handled by Nelson Mullins lawyer for franchise and distribution clients:
Corporate and Regulatory
- representing national restaurant franchisor on regulatory, disclosure, contractual, supply chain, system modification, intellectual property, and social media issues (including revising franchise and area development agreements and updating disclosure documents, handling trademark registrations, advising on international franchising issues, and counseling franchise terminations);
- representing national franchisor of bakery cafes on regulatory, disclosure, and contractual issues (including modification of franchise and area development agreements, updating disclosure documents, drafting confidentiality agreements, and handling state franchise registration filings);
- representing franchisors in the hotel, retail store, commercial office cleaning, and health services industry in franchise compliance and regulatory matters(including disclosure documents, franchise agreements, and state franchise registrations);
- represented national quick service restaurant franchisor in modifying franchise agreement, in counseling on legal requirements for potential franchising of new brand, and on real estate acquisition and leasing issues;
- representing national restaurant franchisor with significant company stores on immigration compliance and ERISA matters;
- representing regional tire and automotive service retailer for new store growth involving approximately 50 ground-up development transactions (including land purchases, ground leases, and built-to-suite leases with preferred development partners);
- representing regional sports-themed restaurant in lease transactions for new store growth;
- represented large multi-unit quick service restaurant franchisee in sale of franchise restaurants, including significant real estate holdings;
- representing national franchisor of bakery cafes in litigating and advising on franchise and commercial disputes (including suits to enforce termination of franchise, enjoin trademark and trade dress infringement, enforce restrictive covenants, and obtain transfer of leases and money damages, and to defend against franchisee claims of fraud, franchise disclosure violations, and wrongful termination);
- representing national restaurant franchisor in litigating and advising on intellectual property, franchise, and commercial disputes (including trademark infringement claims, claims to enforce franchise terminations and collect franchise fees and liquidated damages, and defending against franchisee claims);
- serving as regional litigation counsel for large multi-brand international hotel franchisor in litigation and arbitration of franchise disputes (including suits to enforce termination of franchise, enjoin trademark infringement, and collect royalties and liquidated damages, and in defense of franchisee claims and vicarious liability claims);
- successfully defended tax preparation service franchisor against consumer class action alleging that franchisees were encouraged to prepare fraudulent tax returns to inflate customer refunds and tax preparation fees (claims included breach of contract, RICO violations and unjust enrichment); class certification was denied and summary judgment granted on some claims;
- represented national franchisor of floral and floral delivery shops in litigation around the country involving commercial disputes, franchise termination, trademark and trade dress infringement, restrictive covenants, franchise disclosure obligations and vicarious liability claims;
- represented large national quick service restaurant franchisor in litigation against franchisees to enforce franchise terminations and seek money damages, in franchisee bankruptcy claims, and in defending against antitrust claims;
- representing national restaurant franchisor on certified questions before West Virginia Supreme Court involving franchisor vicarious liability for alleged sexual harassment by franchisee’s managers;
- representing national bottled water distributer in enforcement of trademark and trade secret rights, and in defense of unfair trade practices claims.
- represented regional restaurant franchisor in employment litigation
- representing national pizza restaurant franchisor in lawsuit against former manager of franchisee for misappropriation of trade secrets to start competing pizza restaurant;
- represented large multi-brand international hotel franchisors in objecting to assumption of franchise agreement in chapter 11 plan.
Motor Vehicle Manufacturer/Distributor Litigation and Counseling
- regularly provide legal and strategic counseling to many international auto manufacturers/distributors regarding drafting and enforcement of agreements with dealers, market representation matters (establishment and relocation of dealerships), internal policies and procedures, incentive programs, advertising and advertising associations, dealer network strategies, allocations, fleet, leads, dealership facilities, dealer performance evaluation, dealer areas of responsibility, and field training;
- serve as national and multi-regional counsel for a number of international auto manufacturers/distributors in various business litigation matters involving their dealer networks and vehicle distribution;
- successfully represented multiple auto manufacturers/distributors in various performance-based dealer termination proceedings;
- successfully represented multiple auto manufacturers/distributors in litigation with existing dealers over the establishment of additional dealership representation and relocation of existing dealers;
- successfully represented multiple auto manufacturers/distributors in disputes over sales reporting and challenges regarding incentives and warranty reimbursements;
- regularly represent car, truck, motorcycle, ATV, power sports, marine, ambulance, vocational vehicle, and aircraft manufacturers and distributors in dealer disputes and litigation regarding add points, relocations, terminations, post-termination obligations, dealer advertising, sales incentives, allocation systems, dealer exporting, and other dealer franchise issues.