The Hall of Fame
These six franchise specialists join the Hall of Fame this year. Each has been a part of the Legal Eagles list for 10 years and they join a select group of the best franchise legal professionals in the industry. Congratulations to these star lawyers and thanks for being such an integral part of the franchise community.
We talked with a few of our new Hall of Famers; here’s what they said:
Keith Kanouse, founder of Kanouse & Walker.
What keeps you working in franchise law?
It’s multifaceted, which I like in terms of various disciplines, you have to be aware of so many things. There are all these different businesses and industry segments; it really boils down to being a method of distribution and I’m a big fan of it, provided it’s a win-win.
You’ve made a point of helping franchisees navigate contracts throughout your career. How?
The vast majority of ‘zees are their own worst enemy by not hiring a lawyer and an accountant—you need both.
Most people never really read the contract or the FDD, and when they start they fall asleep. So I concentrate on the FDD and the agreement and I prepare a 15- to 20-page memorandum to the contract, which is in three different colors. The black is the actual language of the addendum changing a certain provision.
Why don’t you think this is a bigger deal to franchisees?
There are lots of people under onerous contacts, but nobody talks to their lawyers because everyone is making money.
What do you wish would change in the industry?
Back in 2007, I wrote an article that was published in the Franchise Law Journal advocating for a single franchise registry.
It’d make it so much simpler. Let the regulators focus on enforcement so there’s not fraud going around instead of nitpicking an FDD that nobody is going to read.
Ryan Palmer, principal at Gray Plant Mooty.
What’s a big trend you’re watching?
There’s been a lot of interest in franchising as a business model and trying to figure out the best way for private equity to be part of a franchise group.
I don’t think anyone has settled on what the best way to do it is. That’s part of the fun for the lawyer on the business side; we get to figure it out every time. It largely depends what the franchisee is looking for and what the horizon is for the private equity.
You started in finance, how did you wind up in franchise law?
My first projects back in the early 2000s were drafting loan documents for franchisees. I’ve seen franchise finance get more sophisticated from there; it’s been interesting to watch how it changes.
Beyond that, it’s really the diversity of issues where you have to understand commercial leasing, commercial law, privacy and IP and all the stuff that goes into advising a franchisor.
Why do you think you made it into the Hall of Fame?
We work really hard to serve our clients well, obviously, but we work especially hard to be practical and solutions oriented. I think people appreciate that. I think as lawyers we’re trained to raise issues, but when we do we always want to offer a solution.
We view ourselves as a counselor and adviser and we want our clients to think of us as that, so we don’t want our clients to fear calling us or thinking of us as the phone call they have to make.
What got you into franchise law?
I started practicing law as a plaintiff antitrust lawyer for the Federal Trade Commission in the late ‘70s. Once I got to the commission, the FTC franchising rule was enacted and it went into effect in 1979; I was put in charge of the rule for the West Coast. We wound up bringing the very first case under the franchise rule in the whole country.
It was a great case involving a company that sold franchises, but they were actually an organized crime family. That got me very interested in the whole field of franchising. I went into private practice and within a year I had my own firm.
What’s a big issue you see in the industry?
These agreements are very one-sided and there’s a tendency not to negotiate anything with many franchisors. When you have that type of one-sided relationship and they’re not being treated the way you’d expect, it’s a problematic relationship.
This is not all franchisors, probably not even the bottom 10 or 20 percent where these problems surface.
You only work with franchisees and their associations—you kind of like fighting for the underdog don’t you?
I’ve always been that way. I went to Berkeley during the Vietnam War and I clerked for a guy who had a huge monopolization case, he worked for the antitrust division. So yes, I enjoy representing real people with real problems.
We’ve also been involved, especially me, in seeking legislation. When franchisees cannot negotiate an even-keeled franchise agreement the only way to protect themselves is with legislation.
Peter Singler, founder of Singler Professional Law Group.
Why do you think your clients and peers nominated you for so many years?
Integrity and results. We provide business and practical advice to complement legal advice. We also believe that every dollar spent with our firm should be an investment that shows a tangible return.
What’s a big trend you’re watching?
There is much more litigation than collaborative work with franchisors, albeit the systems where franchisors/associations are working cooperatively and are doing phenomenal things. Particularly with the significant influx of private equity funds buying franchise systems, getting people to the table to work together—which yields significantly better results for all concerned—is much more of a chore these days.
How has that changed how franchise systems work?
The influx of private equity ownership is having a significant impact on franchise systems. It is not uncommon for franchisees to see three or four ownership groups during their franchise term, and even more management teams. Franchise associations are essential to a healthy system and provide a consistent and stable channel for franchisee issues to be voiced, meaningful feedback to franchisors and to provide systems and support.
What would be a positive change for the industry?
I am ordinarily critical of business regulations. However, there is a great deal of inconsistency in franchise laws, disclosures, etc. This creates a significant administrative burden for franchisors, and not a lot of substantive protections for franchisees. I think it is time for federal legislation to simplify pre-sale disclosures, but also provide basic relationship and pre-sale protections for franchisees.