Growing a Franchise
1851 Franchise’s annual roundup of the top legal players in the industry is back. Meet Craig Tractenberg and hear his insights on legal issues in the franchise space.
Legal Player: Craig Tractenberg
Firm: Fox Rothschild LLP
Craig Tractenberg’s journey into franchise law began with an unexpected twist. He originally intended to become a securities lawyer on Wall Street, but when job prospects fell through during a recession, he stayed with a small Philadelphia firm that represented Dunkin’ Donuts Inc. As Dunkin’ grew, Tractenberg’s franchise practice grew alongside it, and the in-house team gave him a first-class education in the intricacies of franchising. Today, Tractenberg is co-chair of Franchise and Distribution Practice and International Arbitration Practice at Fox Rothschild LLP, and he continues to shape the field by helping to write the next franchise law textbook.
1851 Franchise reached out to Tractenberg to learn how franchisors can protect their brand and avoid legal mistakes. Check out his insights below.
1851 Franchise: How did you fall into franchising?
Craig Tractenberg: I intended to be a securities lawyer on Wall Street, but my job prospects fell through during a recession, so I continued working with a small law firm in Philadelphia which represented a small client, Dunkin Donuts Inc. As the client grew, so did my franchise practice as Dunkin’ was a franchise leader at the time and their superb in-house staff taught me about franchising. My securities law education helped when preparing FDDs [Franchise Disclosure Documents] as well, so it was the right way to learn franchise law. Now law schools have classes on franchise law and I am helping to write the next textbook.
1851: What do you see as the most important things franchisors should do to protect their brand?
Tractenberg: Protect all of the intellectual property. Strong trademark protection and policing the trademark use is extremely important, but so are the secrets which are the competitive advantage for some companies. The special sauce and recipes need protection, as do the potential plans and marketing strategies of the company. Solid contracts, disclosure documents and registration of marks are essential. But the company must enforce its rights or they may be lost forever.
1851: How important is the information in Item 19?
Tractenberg: I find the information extremely important. Franchises are hard to sell to prospects without an Item 19. Without an Item 19, the offering is hard to analyze for the candidate and its professionals. The franchisor also learns from the process in compiling the Item 19. It can be a report card to compare competitors. I have seen successful franchisors without Item 19, but they need to separate themselves from the pack somehow, and that is difficult with metrics that make sense.
1851: What is the single largest legal mistake brands make?
Tractenberg: Selecting the wrong wars to fight with franchisees. Long-term relationships are not always about winning the argument, but some wars need to be fought. I find this to be a culture issue rather than strictly a legal issue, but the legal team is hired to protect the culture, and the culture may need some adjustment.
1851: How does Fox Rothschild stand out as a franchise law firm?
Tractenberg: Quality work is a prerequisite and you must build a strong bench of specialists and generalists. You are generally known by the type of matters you are engaged to handle and the clients you represent, but that is only one part of your public image. Today, you must improve the profession by writing and speaking, posting to social media and contributing your energy to the IFA, the ABA or another franchise-focused group.
1851: What is the best business advice you have received in your career?
Tractenberg: President Ronald Reagan probably said it best when speaking about the former Soviet Union: “Trust but verify.” I also find myself reminded frequently of what Maya Angelou said: “When someone shows you who they are, believe them the first time.” Finally, when trying a case, know that “truth” is only one argument, and realize that it may not be the winning argument. You may need additional arguments in addition to the truth to win the case and a reason to find the truth.
1851 Franchise’s Supplier Database connects franchisors and franchisees with top legal experts. If you need guidance on agreements, compliance or disputes, click here for more information.
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