1 Life as a Franchise ClerkAndrae Marrocco Partner | Dickinson Wright Franchising is on the rise Growth area for lawyers and clerks because there is such a heavy turnover It covers many industries It’s an area of practice that has many sector events (internationally) It’s an international area of practice It’s an area of practice that provides an opportunity for clerks to play a major role in the practice
2 Franchise TransactionsPrivate Practice vs In-House Franchise Transactions Franchise Law Achievement INTRO Pros/Cons TIMELINE Q & A
3 FRANCHISE LAW Part of the knowledge “toolkit” that a competent franchise law clerk should be armed with
4 Franchise Law Provincially regulated in six provinces: Ontario, Prince Edward Island, New Brunswick, Manitoba, Alberta, British Columbia Self regulated sector Reliance on the provincial court system to enforce and develop the law Provincially regulated Many similarities, but there are some notable differences Canadian Franchise Association assists in promoting best practices together with a number of other services to Franchisees and Franchisors – annual conference, webinars etc. Sole remedy is court action Courts have developed the standards, and there are sometimes inconsistencies (eg the latest All Stars case + 6 month vs 2 year rescission rule
5 Franchise Law What is a franchise? What does franchise law protect?Pre-sale disclosure (s5 AWA) Duty of good faith and fair dealing (s3 AWA) Right to associate (s4 AWA) Right to rescind (s6 AWA)
6 Franchise Law Franchise Disclosure Document (s5(4))All material facts; Financial Statements: Copies of all proposed franchise agreements and other agreements Prescribed statements and certificates; Other information as prescribed
7 FRANCHISE TRANSACTIONSStart-up franchise – usually recommended that you have 2-5 units, replicable model, control issue Direct franchising/selling units to new franchisees Transfer of units from on franchisee to another Master rights to a territory Area development rights Area representatives (no need for disclosure) Joint ventures Into other territories
8 Franchise Agreements Grant of the licence (IP and system)Exclusivity vs rights reserved Term Premises Fees and reporting (banking and audit) Training Obligations (authorized stuff, full time, joint employer protection, cybersecurity, Manual)
9 Franchise Agreements Advertising (promotions and programs)Manual and system changes Restrictive covenants Transfers Intellectual property Default (specific remedies) and termination
10 PRIVATE PRACTICE IN-HOUSE
11 What to expect in private practiceFranchisee Meetings (franchise business model, incorporations) Critical review memorandum All franchise documents (ancillary, purchase) Ongoing requirements (manual, changes, notices) Franchisee associations / Franchisor advisory councils Defaults and disputes Rescission claims Court actions
12 What to expect in private practiceFranchisor Meetings (strategy, structure, IP, incorporations) Drafting franchise documentation (ancillary, purchase) Communication to finalize documentation Ongoing requirements (disclosure, manual, notices, renewal, PPSA registrations, updates in law ) Disputes and defaults Franchisee associations / Franchisor advisory councils Review rescission claims Court actions
13 What to expect in-houseMeetings and strategy Minute books and incorporations Review application materials (initial contact with candidates) Prepare initial drafts of franchise documents (ancillary) Manage outside counsel and service providers Record keeping (minute books, charts, PPSA registrations) Manual, monitoring (fees), notices, renewal Manage franchisee interactions Franchisee associations / Franchisor advisory councils Disputes and defaults
14 International expansion
15 Don’t take yourself too seriously and don’t take things personallyRest, clear your mind, take the time to step back and see the big picture – use charts, charts, charts to clarify and help you remember important details THINK about every angle, why are the parties doing this deal, what are their motivations and what is important to them, whose and what are the interests that I’m supposed to be protecting Success is always a team effort and it requires balancing many things – DON’T take on more than you can chew or understand
16 ACHIEVEMENTS Business growth Drafting skills Transaction experience Corporate knowledge Resolving issues Building client relationships
17 PROS / CONS
18 Interesting and RewardingIndependent work Interesting and Rewarding Client contact PROS Growth
19 Interruptions and deadlinesLong hours Abandoned deals Personalities CONS Interruptions and deadlines
20 Franchise Clerk Work DayLunch Independent Work Meetings More Coffee or Tea Plan AM – Get dressed 9:00 AM 10:00 AM 1:00 PM 2:00 PM 5:00 PM Home Coffee or Tea Drafting Calls
21 Q + A