Do's and Don'ts on the Legal Front, from IFA Symposium
Two attorneys presented do’s and don’ts Tuesday “for surviving another year of franchising,” at the last day of the International Franchise Association’s Legal Symposium in Chicago.
On the cyber-security front, said Tami McKnew, a partner with Smith Moore Leatherwood: Do pay close attention to cyber-security, and don’t skimp on information technology.
“IT guys are expensive. Forensics guys are expensive,” she said. “Hire them,” because spending on security in advance of data breaches will save on litigation costs later on. Do monitor electronic systems on a continuing basis, she added.
Erik Wulff, a partner at DLA Piper, provided advice on employment issues. “Do get your own house in order,” he said, meaning the employment practices at all corporate-owned stores and company headquarters.
“We’ve seen the Department of Labor will go after systems as a whole for wage and hour violations. If you’re in material compliance you can create distance” between the franchisor and franchisee.
Do check contracts/manuals on franchisee employee practices, and “make sure they exercise only the amount of control necessary,” he said, and no more. Do distance yourself from franchisee employment practices, positioning the franchisor’s materials as guidance only.
The two presented a review of franchise legal trends they’re watching. “There’s a climate change in franchising,” McKnew said. “It involves unsettling and challenging environments.”