Avoiding the Accidental Franchise When Structuring Licenses or Distribution Agreements
Recording of a 90-minute CLE webinar with Q&A
Conducted on Thursday, March 2, 2017
Recorded event now available
This CLE webinar will guide business counsel in determining when arrangements intended as licenses or distribution agreements could inadvertently result in the creation of a franchise. The panel will discuss strategies for structuring these arrangements to avoid an accidental franchise.
Franchises are highly regulated arrangements that require substantial disclosure documentation and other compliance efforts. Licensing and distribution arrangements are lower-cost, less-regulated alternatives. Misclassifying a business relationship as a license or distribution arrangement when it is actually a franchise is a common and costly mistake.
A poorly drafted license or distribution agreement can result in the accidental creation of a franchise subject to complicated and demanding laws. Significant consequences, including damages and rescission of franchise agreements as well as fines, penalties, freezing of assets, restitution and personal liability of a company’s management, can flow from noncompliance with franchise laws. It is a felony to violate franchise sales laws.
Business counsel can help clients avoid missteps by understanding the thin line separating a franchise from a non-franchise license or distribution arrangement and advising clients about structuring strategies to help avoid creating an inadvertent franchise.
Listen as our authoritative panel provides perspectives on drafting licenses and distribution agreements to avoid creating an accidental franchise. The panel will also discuss best practices for complying with federal and state franchise and business opportunity laws once an inadvertent franchise is established.
- Determining whether a business constitutes a franchise
- Three prong analysis
- Variance among federal and state law definitions
- Strategies for drafting licenses and distribution agreements to avoid accidental franchises
- Trademark use
- “Marketing plan,” “community of interest” or substantial assistance/significant control
- Franchise fee
- Complying with federal and state franchise and business opportunity laws once a franchise is established
- Franchise sales laws
- Franchise “relationship” laws
The panel will review these and other key issues:
- How do franchise arrangements differ from non-franchise licensing and distribution agreements? What are the pros and cons of each?
- What risks do businesses face if they inadvertently misclassify their franchise as a non-franchise license or distribution agreement?
- What federal, state and foreign franchise laws apply when a business is determined to be a franchise, and what are the key legal requirements of each?
Craig R. Tractenberg, Partner
Mr. Tractenberg is a skilled international litigator who handles complex business disputes involving intellectual property, licenses, business torts and insolvency issues. He regularly structures new franchise programs, many of which are international. Mr. Tractenberg also defends and enforces franchise agreements. He has also served as special counsel to franchise companies.
Rochelle (Shelley) Spandorf, Partner
Davis Wright Tremaine,
Ms. Spandorf focuses her practice on business franchise and distribution issues, representing franchisors, manufacturers, licensors, suppliers, franchisees, and distributors in their domestic and international expansion and strategic development. She concentrates her practice on a broad spectrum of transactional and regulatory issues for clients in all industry sectors, and assists clients with their contracts and legal compliance matters, franchise sales compliance duties, and operating issues.
CLE On-Demand - Streaming Video
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*Only available for attorneys admitted for more than two years. For OH CLE credits, only programs recorded within the current calendar year are eligible - contact the CLE department for verification.
**NH attendees must self-determine if a program is eligible for credit and self-report their attendance.
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AK, AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, KY, ME, MN, MO, MT, ND, NJ, NM, NY, OR, PA, TN, TX, UT, VT, WA, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
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CLE Credits By State
Hinckley, Allen & Snyder
The presentation was perfect - not too technical or legal. Keep up the good work!!
I thought the content covered in the webinar was very helpful.
I liked the concise and clear presentation of the subject matter.
Moss & Barnett
I found it helpful to hear the information and perspectives of all the presenters.
Mary Grace Folwell
Business Contracts and Franchise Advisory Board
Bowman and Brooke
Davis Wright Tremaine
Chief Legal Officer
Coverall North America
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