Barry Kurtz dark logoFranchise First and Foremost
February 2011
 
16000 Ventura Boulevard
Suite 1000
Encino, CA 91436
818-728-9979

WHAT DO WE DO? 

 

What does a law firm specializing in franchise law actually do? During the last 18 months, we were fortunate to have the opportunity to represent many franchisors and licensors, franchisees and licensees and sellers and buyers in a wide variety of matters, including the following transactions.  We acted as counsel for:

 

  • 4 sellers/franchisors in asset sales of more than 50 company-owned units to franchisees.
     
  • 5 franchisors in more than 30 franchisee-to-franchisee transfers of franchised units.
     
  • 2 franchisors in more than 10 franchisee renewals of Franchise Agreements.
     
  • 5 franchisors in more than 20 default, termination and work-out matters.
     
  • 15+ franchise candidates in their decision-making process for the purchase of various franchisors' franchises.
     

     

  • The franchisee/seller of more than 40 franchised units to successor franchisees.
     
  • 2 buyers in asset and stock acquisitions of independent businesses. 
     
  • The buyers in 2 acquisitions of independent businesses.
     
  • A hotel owner/licensee who entered into a licensing agreement with celebrity chefs for the development of a new restaurant concept in the hotel.
     
  • 3 franchisors who entered into short and long term development agreements with their franchisees for more than 75 franchised units.
     
  • 3 franchisors who sold franchises in 5 foreign countries.

In addition:
 

  • We conducted franchise due diligence for the buyers in 2 multi-million dollar acquisitions of franchisors. 
     
  • We registered, renewed, amended and exempted Franchise Disclosure Documents for more than 20 franchisors in every applicable state.
     
  • Barry Kurtz served as a consultant to law firms or as an expert witness in 5 franchisor/franchisee related matters.

 

First and foremost, we are franchise attorneys. Additionally, we have substantial experience representing sellers and buyers of businesses of all kinds.

FRANCHISOR 101:  AREA DEVELOPER OR MASTER DEVELOPER? 

 

Regardless of the exact nature of a development agreement between a franchisor and a franchisee-developer, the purpose of this relationship is the same: to speed up the development of the franchise system in a particular geographic area.

 

Under an area development program, the franchisor will grant the franchisee-developer the exclusive right to develop and operate a minimum number of franchised units in a defined territory within a specified period of time according to a development schedule agreed upon by the parties. Each franchised unit operates under its own franchise agreement between the franchisor and franchisee.

 

Under a master developer program, the franchisor will grant the franchisee-developer the exclusive or non-exclusive right to solicit and sell a minimum number of franchises for the franchisor in a territory under a development schedule. The franchisee-developer must then assist these franchisees in site selection and provide them with training and operations support in exchange for a portion of the initial franchise fees and royalties that would otherwise be paid to the franchisor. Each franchised unit operates under a franchise agreement between the franchisor and franchisee.

 

Each program has benefits for both the franchisor and franchisee-developer:

 

Under the area developer program, the franchisor will receive development fees for the opportunity granted, initial franchise fees for each unit and royalty income from franchise operations. The franchisee-developer gains exclusive rights in its territory and, in some cases, may pay less per unit as the number of purchased units increases. If the franchisee-developer does not stick to the development schedule, the franchisor generally will have the right to open up the exclusive territory to other area developers, reduce the number of franchised units that the franchisee-developer can open or terminate the development agreement and take the territory back. However, the franchisee-developer will generally continue to own and operate the units that were opened before termination.

 

Under the master development program, the franchisor shares its revenue streams with the franchisee-developer, but is relieved of the responsibility to recruit, train and support the franchisees in the territory.

 

Again, if the franchisee-developer does not perform, the franchisor has the right to terminate the future rights of the franchisee-developer, who may still earn certain fees from the franchised units that were opened before termination.

 

As in most cases in franchising, the key ingredients for each program are the quality of the franchisee-developer and a realistic and achievable development schedule. Experienced franchise counsel can provide the structure for both programs. 

APPOINTMENT TO STATE BAR COMMITTEE

 

Each year the State Bar offers attorneys an opportunity to contribute to the legal profession and the public by volunteering to serve on one of the State Bar's committees. Barry Kurtz was recently appointed to the California State Bar Business Law Section's Franchise Law Committee for a 3 year term. He previously served as a member of this Committee from 1983-1985 and 1998-2000.

BARRY KURTZ HONORED AS SUPER LAWYER

 

Barry Kurtz has been selected as a 2011 Super Lawyer in his specialty of franchise law. This honor is bestowed by the Journal of Law and Politics, in conjunction with Los Angeles Magazine. Barry was likewise selected as a 2010 Super Lawyer last year.  The Super Lawyer designation is the result of peer evaluation. Nominations are received from thousands of lawyers throughout the state. According to the Journal of Law and Politics, this honor is reserved for the top 5% of the lawyers in each practice area.

This communication published by Barry Kurtz, APC is intended as general information and may not be relied upon as legal advice, which can only be given by a lawyer based upon all the relevant facts and circumstances of a particular situation.

Copyright Barry Kurtz, A Professional Corporation 2010 
All Rights Reserved.

 
In This Issue
What Do We Do?
Franchisor 101: Area developer or Master Developer?
Appointment to State Bar Committee
Contributing Expert
Aaron Weiner
Weiner Property Services, Inc.

Prior
Newsletters

Barry Kurtz
Barry Kurtz is a prolific writer on the subject of franchise law. From due diligence to franchise appraisal, his articles are a valuable resource to any franchisee and franchisor.  He has been named a Certified Specialist in Franchise and Distribution Law by the State Bar of California Board of Legal Specialization.



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16000 Ventura Boulevard, Suite 1000
Encino, CA 91436
818-728-9979

www.barrykurtzpc.com
bkurtz@barrykurtzpc.com