As part of its annual Franchise Legal Players issue, 1851 profiled the top franchise attorneys in the field to shine a spotlight on the work they do for the franchise industry.
1851: Tell us about your background and your firm.
Nancy Lanard, Senior Partner at Lanard and Associates, P.C.: I am the author of many articles, have been quoted in numerous national publications and have been interviewed for several radio programs on the topic of business and franchise law. Over my decades of legal practice representing businesses, I know how to listen to my clients and think outside the box to respond to their needs. I represent start-ups and small to mid-size companies as their legal advisor. My years of experience representing clients buying a franchise or businesses that want to expand by franchising nationwide have earned me the award of Legal Eagle for 11 consecutive years and the Legal Eagle Honor Roll. I have received many other legal recognitions, such as Martindale-Hubbel peer rated AV Preeminent, their highest rating, which is chosen by other attorneys, and an Avvo.com superb rating. I represent commercial tenants nationwide for several franchise chains, including Hand & Stone Massage and Facial Spa, My Salon Suite, Pet Supplies Plus, Huntington Learning Center and Sylvan Learning Center, along with many other franchisees of various franchise systems. Having been in-house counsel to Nutri/System, Inc. 20+ years ago, when they were the number one weight loss business in the U.S. and had 1,300 franchised locations and 500 corporate locations, I am uniquely positioned to help prospective and existing franchisees. I believe that every successful business has a team behind it consisting of a business attorney and business accountant; I would like to be on your business team so she can make your business dreams a reality.
Lanard and Associates is a boutique firm focusing on helping franchisees nationwide. We work with individuals who are buying franchises, individuals acquiring an existing franchised business, businesses that want to expand into franchising, and general businesses looking for a boutique firm that will listen to their concerns. We handle transactional legal matters including commercial leases, joint ventures, and contracts, among others.
Our record with long-standing clients coupled with our ability to assist companies at all levels of their growth gives us pride. We listen to our clients, think outside the box to assist them and are responsive to their needs in plain English and not legalese.
1851: What are some must-ask questions when franchisors and franchisees are vetting potential franchise attorneys?
- What percentage of your practice is franchise law? The client should make sure that the attorney representing him or her mainly practices franchise law and does not just dabble in it or has not just handled a few matters. The majority of our practice centers around practicing franchise law representing prospective franchisees and related services such as setting up their business entity and negotiating the lease for their business.
- Do you charge a flat fee? It is important for any prospective franchise client to know the fees in advance so he or she can plan for the costs. Whether you are a potential franchisor looking to have the franchise documents prepared or a prospective franchisee looking to invest in a franchise opportunity, it is critical that you retain an attorney who can tell you up front what the costs will be in the form of a flat fee. Our fee for a franchise document review for a single unit franchise has not changed in over 11 years.
- Do you practice nationwide? How can you do that? When having the initial consultation with the franchise attorney, the prospective client should ask questions about the attorney’s knowledge of franchise law and of the law applicable to the client’s jurisdiction (residence of the client and/or territory in which the territory will be located). A good franchise attorney should know off the top of her head the federal law (FTC Rule) and the franchise laws of the states that have them.
- What other matters with which I will need legal help can you handle? As franchisee counsel we also can set up the legal entity for the client’s business and review and negotiate the lease for that business. From my in-house experience at Nutri/System, Inc., and later representing franchisees of Aamco Transmission, Cardsmart Retail Corporation, Rita’s Italian Ice, Sylvan Learning Center, My Salon Suite, Pet Supplies Plus, and many others, I and my team of attorneys have the decades of experience to handle the matters that may arise for a new franchisee or franchisor.
1851: In broad terms, do you have a particular case that stands out to you as an industry learning experience?
Lanard: As part of our review of the franchise documents for a prospective franchisee we always check the state records of the state in which the business will be located for corporate and limited liability company registrations to see if the brand name of the franchise is being used by a local business that is unrelated to the franchise that could sue our client for trademark infringement. Under trademark law in the United States, if a local business has been using the brand name first, prior to the registration of the trademark by the franchisor, that local business has priority rights to use the name in their marketing area. If that marketing area coincides with our client’s territory, our client is at risk for being sued for trademark infringement by the local business. In that instance (which has occurred a handful of times), it is essential that the franchisor defend, indemnify and hold our client harmless from any trademark infringement action.
In fact, in one recent case, the franchisor has registered a new trademark for the proposed franchisee client to use instead of franchisor’s main trademark/brand, because there was another company using a name in client’s proposed territory that was confusingly similar to the brand name. The franchisor also agreed to defend, indemnify and hold the client harmless from any trademark action that might be brought. In this instance, our process of checking the brand name locally potentially saved our client tens of thousands of dollars in a possible trademark lawsuit.
1851: What is the most rewarding aspect of your work?
Lanard: It is most rewarding to know that we are helping people who could have serious issues and incur substantial costs if we had not been involved in the review of the franchise documents or negotiation of the lease for their business. Having decades of experience, we are able to provide a notion of what is typical and what is not typical in the franchise documents. We are able to head off serious issues that a franchisee may encounter down the road. This type of help to our clients is very rewarding. Another rewarding aspect of our practice is our understanding of the importance of retail lease negotiations. For example, many times a business cannot be sold because the assignment provisions in the lease are so stringent or conditioned on such tough provisions, that the prospective buyer cannot meet those conditions. Additionally, the personal guaranty in the lease might mean that an individual may be responsible for hundreds of thousands of dollars of future rent if they wish to get out of their business. It is especially rewarding to know that we are helping ameliorate that situation for our clients.
1851: What are your top concerns for the franchise industry in the next year?
Lanard: I think it is very important that the industry recognizes that certain franchise systems are set up to fail – prospective franchisees and franchise consultants should not be looking at or considering franchise systems where the franchisor’s financials clearly indicate a downward spiral or failing system. As former in-house counsel to Nutri/System 20-plus years ago, although the franchise (#1 weight loss company in the U.S. at the time with over 1,300 franchised locations and 500 corporate locations in the U.S.) validated well with their franchisees (most had done financially very well), anyone looking at their financial statements could have discerned how financially weak the company was (mainly due to the owners taking out substantial quarterly dividends that left no funds in reserve) and when the franchisor went into bankruptcy the franchisees quickly went out of business and closed their doors. I am seeing the sale of failing corporate locations to potential franchisees by certain brands. Instead of closing the stores, they are selling them off as franchised locations. If the corporation could not make the locations successful, how can a franchisee, who also has to pay royalties and advertising fund fees, make these successful? I think some sort of governance by the FTC or states over the sale of franchises that are not likely to succeed is essential.
1851: What are you most optimistic about in the franchise industry in the next year?
Lanard: Franchising is an excellent means of business ownership. A person looking to invest in a franchise must still validate the franchise system carefully and should retain experienced franchise counsel to review the documents and evaluate the opportunity. Learning a business through the experience of a good franchise system is the best way, in my opinion, for someone without prior business experience to succeed in a business. I believe that franchise opportunities are still the best way for anyone to have the greatest chance at business success in the U.S.