Top Franchise Legal Players: Brian Schnell, Faegre Drinker Biddle & Reath LLP

• Honoree: Brian Schnell
• Role: Partner and Chair of Franchise Practice at Faegre Drinker Biddle & Reath LLP

Brian Schnell is a seasoned franchise attorney with over 30 years of experience, representing franchisors across the U.S. and internationally. As the leader of Faegre Drinker Biddle & Reath’s franchise and distribution practice, he provides practical and creative solutions to both emerging and mature franchisors. His unique background includes serving as chief operating officer and chief legal officer for a major health care franchisor, where he led field operations and franchise administration. He is also the only franchise lawyer who has ever chaired the Franchise Relations Committee of the International Franchise Association (IFA). 

Schnell's expertise spans structuring domestic and international franchise programs, guiding franchise mergers and acquisitions and ensuring compliance with franchise sales and financial performance regulations. He also specializes in supply chain management, trademark and brand protection, and resolving system standards compliance issues. His deep industry knowledge and commitment to understanding clients' businesses and objectives make him a trusted advisor in the franchising world.

1851 Franchise reached out to Schnell to learn about how franchisors can protect their brand and avoid legal mistakes. Check out his insights below.

1851 Franchise: What do you see as the most important things franchisors should do to protect their brand? 

Brian Schnell: In order to build, sustain and protect the franchisor’s brand, a franchisor should:

1. Instill in all its stakeholders an undying devotion to the brand. This means determining what the brand stands for and then delivering on that brand promise.
2. Obsess over unit level economics and franchisee profitability.
3. Empower franchisees through a culture of collaboration. Franchisees are more interested in having a voice/being heard than having a vote, but a franchisor should not give up its decision-making authority.
4. Balance the interests of the franchisor, franchisee and system as a whole (which includes having a strong franchise agreement that allows a franchisor to absolutely protect its brand against any free-riding franchisee).

1851: How important is the information in Item 19 of the Franchise Disclosure Document? 

Schnell: Item 19 can be very important, depending on the information a franchisor discloses and how a prospective franchisee uses the information disclosed.  An Item 19 financial performance representation (FPR) with average gross sales (or some similar variation) only is of little use. On the other hand, a carefully prepared and vetted Item 19 FPR that has some level of revenue and key expenses or other system specific key performance indicators (KPIs) broken out by quartiles or high/medium/low thirds can be extremely valuable for the franchisor and its franchise development efforts and a franchisee in its due diligence (ideally with a franchisee’s key advisors).

1851: What is the single largest legal mistake brands make? 

Schnell: Not fully understanding how to effectively design, implement and communicate system change. Too many franchisors (especially emerging franchisors) primarily rely on the franchise agreement that gives them the right to unilaterally make system change and requires the franchisee to make the change (often regardless of cost and frequency), rather than strategically considering options, relying on data and getting franchisee input — franchisees want to be heard — and then knowing how to effectively communicate change.

1851: How do you stand out as a franchise law firm? 

Schnell: Faegre Drinker is one of the very few franchise law firms that not only understands all the legal issues a franchisor will face, but also keenly understands the franchise business model, the complex nuances of the franchise relationship and what it fully takes to create, build, evolve and protect a successful and sustainable franchise system. One example of that focus is that I am the only franchise lawyer who has chaired IFA’s Franchise Relations Committee.

1851: What is the best business advice you have received in your career?

Schnell: Ask questions, listen and seek to understand a client’s desired outcome and then be a key part of the client team to achieve the desired outcome effectively and efficiently.

Every great franchisee had help buying a franchise. Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit www.1851growthclub.com and start your journey.