Top Franchise Legal Players: Harris Chernow, Reger Rizzo & Darnall LLP

• Honoree: Harris Chernow
• Role: Partner, Reger Rizzo & Darnall LLP

Harris J. Chernow is a highly regarded partner at Reger Rizzo & Darnall LLP, chair of the firm’s national Franchise & Distribution Practice Group, and an active contributor to the Corporate & Business Services and Hospitality Law Groups. He has a national practice representing franchisors, franchisees and distributors across various sectors, including the hotel and hospitality industry. Chernow's extensive experience includes complex mergers and acquisitions, executive employment, leasing and real estate, mediation and arbitration. 

Chernow's client base ranges from startups to large, established companies, encompassing franchisors, franchisees, area developers, master franchisees, franchisee associations, distributors and private equity-backed businesses. He is sought after for his dispute resolution skills in franchise, hospitality and commercial disputes and is frequently appointed as an arbitrator and mediator. 

1851 Franchise reached out to Chernow 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? 

Harris Chernow: I’d have to say that some of the most important things to protect the brand are consistency by the franchisor with its brand standards, making sure — whether it's a company-owned or franchisee-owned location — that there is consistency. Too many times, you walk into one location and another, and they're night and day in terms of how they look, their cleanliness, how the people deal with the customers and things of that nature. So, I would say one of the big things is consistency.

I’d say another is making sure that there's an open dialogue between the franchisor and the franchisees and not just a one-way street from franchisor to franchisee. And in that vein, it's important to explain the importance of certain programs — new equipment, upgrades or policies being initiated. Just don’t dictate it; explain what it is. That way, franchisees are more receptive to buying into these changes.

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

Chernow: I think it's very important. Item 19 is still an optional item within the Franchise Disclosure Document (FDD), and it's a choice by the franchisor whether or not to provide any Item 19 information. The financial representations made in Item 19 can be extremely important to both the franchisor and the franchisee. From a franchisor’s side, it’s a sales tool to demonstrate numbers they are producing. From a franchisee’s perspective, the more information they have, the better off they can be in making an informed decision about entering a particular system.

The key to Item 19 is its accuracy. Any time a franchisee has an opportunity to make a claim, if the Item 19 is off, that could be detrimental to the franchisor. So, Item 19 is very important. It allows franchisees to get more insight into the numbers, aiding in due diligence and ensuring they go in with their eyes wide open.

If a franchisor is coy or avoids Item 19, it can be a mistake. Without it, the world is open to claims that the salesperson made unsubstantiated promises. However, sometimes franchisors avoid Item 19 to prevent making accidental mistakes in the data. When franchisors do provide accurate Item 19 data, it helps them defend against claims by showing they provided truthful and precise information upfront.

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

Chernow: A significant legal mistake is making claims and misrepresentations, often not in a devious manner, but out of an eagerness to sell. Misrepresentations can happen when there is no Item 19, leading to unauthorized disclosures by salespeople. 

Another major mistake is not putting in an Item 19, as it opens the franchisor to unsubstantiated claims by franchisees. Without Item 19, franchisees might rely on salespeople’s promises, making it harder to manage expectations and legal compliance.

Also, some franchisors take a dictatorial approach, expecting franchisees to follow orders without fostering a collaborative relationship. This attitude can lead to legal issues and franchisee dissatisfaction, ultimately harming the brand.

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

Chernow: What makes us stand out is that we openly represent both franchisors and franchisees. Many firms only represent one side, but we do both, although not within the same system. This approach has been extremely helpful to me and my clients. It allows us to understand the perspectives and logic of both sides, offering a more comprehensive view and better advice. 

We listen and learn from our clients, understanding their needs and not jumping to conclusions. We provide honest feedback, even when it means telling a client that their case may not be strong. This knowledge, patience, and honesty help us provide the best possible service.

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

Chernow: “You should have gone to med school.”

No, seriously. One of the best pieces of advice I received early in my career was to maintain professionalism. It’s crucial to be who you are, not pretending to be someone you’re not. Every lawyer has their own style, and it’s important to be genuine and real in your area of law. Along with this, maintaining professionalism involves not taking things too personally and upholding integrity in all dealings. This advice has stuck with me throughout my career and has been fundamental to my approach as a lawyer.

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