Labor and staffing have created many challenges. What legal issues do you see arising?

"Franchisees are looking for franchisors to assist them in finding, training and onboarding employees. Yet many franchisors still need to carefully consider these requests in light of the ever-changing joint employer legal landscape."

—Kristin Corcoran, Appleby & Corcoran

"We have seen a lot of questions relating to employee vaccine mandates and whether booster shots are required for an employee to be considered fully vaccinated. Right now, the CDC does not include ‘booster shots’ in its definition of fully vaccinated. To encourage vaccination and booster shots, many clients have adopted incentive programs, stressed personal responsibility and provided paid time off to allow employees to get vaccinated."

—Christina Fugate, Ice Miller

"The number one issue will be the ability to manage remote workers, maintain productivity, morale and a sense of common goals/purposes. However, remote working and technological advances pose a significant opportunity, if managed well. For retail, restaurant and service businesses that need to work from a fixed location, business owners must be proactive in addressing inflation (general and wage inflation) to retain a consistent workforce, while being able to balance price increases to accommodate those costs increases."

—Pete Singler, Singler, PLC

"It’s possible franchisees will not have sufficient staff to remain open during required hours, in which case we may see terminations based on abandonment but the abandonment may ultimately be due to impossibility to perform."

—Elliot Ginsburg, Garner, Ginsburg & Johnsen

"One particular legal issue stemming from the labor shortage relates to store closures. Most every franchise agreement contains a ‘go dark’ clause, or similar prohibition on unauthorized store closures. What you are seeing, especially in the QSR world, are restaurants with skeleton crews, or in some instances, only one or two employees in the space. After first reducing hours of operation, many of these franchisees are closing restaurants for weeks at a time. I am interested to see if any franchisors issue default notices for these closures."

—David Paris, Paris Ackerman

What COVID-era legal issues are you still watching?

"We still have clients fighting with landlords over rent during the first few months of the COVID-era. The way we are dealing with it is to try to give something back in return for a rent abatement. Either we add more term at favorable rentals or promise to make substantial improvements, which ultimately enhance the property value."

—Michael Ackerman, Paris Ackerman

"We have already worked with one franchisee to avoid termination as a result of a temporary store closure that was impacted negatively by COVID-19. We approach these with care and based on the client’s objectives, but find that negotiations are often the better route than lawsuits in situations like this."

—Elliot Ginsburg, Garner, Ginsburg & Johnsen

"We are monitoring legal issues relating to supply chain problems. This includes monitoring lawsuits addressing force majeure and other contractual provisions. Force majeure was a buzzword in 2020 and 2021, and we are now starting to see some of the cases work their way through the courts."

—Christina Fugate, Ice Miller

"What rights, if any, that tenants may have where local law restricts their ability to fully occupy their space(s) or where the percentage of permissible occupancy is limited to less than normal numbers or percentages, remains a challenging issue for both landlords and tenants. For new leases that are being negotiated, we try to anticipate these issues and provide for the various circumstances in the lease. Where the issue arises in an existing lease, typically as a result of reduced revenues and difficulties in meeting rental obligations, we try to negotiate a fair deal, frequently including some abatement of the rent and some unpaid rent being ‘folded into’ payments over future periods of the lease term."

—Richard Rosen, Rosen Karol Salis

"I think we will continue to see more cases asserting force majeure as a defense to performance as well as claims for insurance coverage for COVID-related losses. I keep an eye on developments and jurisdictional quirks in this area."

—Bethany Appleby, Appleby & Corcoran

See the full 2022 Franchise Times Legal Eagles list here.