Franchise Legal Player: Barry M. Heller
Firm: DLA Piper
Barry Heller has built a reputation as a trusted advisor to franchise brands navigating growth, compliance and long-term risk. With experience advising countless franchisors, both domestic and international, across multiple industries, including restaurants, hospitality, retail and janitorial, Heller brings a practical, business-minded approach to franchise law. His work focuses on helping brands scale responsibly while protecting both the franchisor and franchisee experience.
1851 Franchise connected with Heller to discuss what franchisors often overlook, where legal risk hides during expansion, and the lessons that continue to shape his advisory philosophy.
1851 Franchise: What originally drew you to franchise law, and what has kept you engaged in the space over time?
Barry M. Heller: As part of my federal court clerkship, I had the opportunity to experience a wide variety of cases involving many industries, claims and issues. I was intrigued by franchise law because of the variety it similarly offers.
I have represented franchisors in numerous industries, including restaurants, hotels, retail establishments, schools, real estate brokerages, residential home builders, car rental companies, cleaning and janitorial services and many others. The issues have also been varied, including claims for fraud, breach of contract, antitrust, trade secret violations, RICO, trademark and copyright infringement, joint employer, misclassification and non-competes. The wide variety of matters has made my practice extremely interesting, challenging and rewarding.
1851: As franchising continues to evolve, what legal issue do you see brands most often underestimating today?
Heller: I think there are several legal issues that brands may underestimate today, although these issues have been the focus of the franchise laws already for a few years. I think that the courts will continue to scrutinize carefully the no-poaching clauses in franchise agreements, which were considered routine many years ago.
I also think that there will most likely continue to be cases involving the impact of the employment laws on franchising, both misclassification and joint-employer issues. The entire concept of post-termination non-competes has come under more scrutiny recently, and I think that brands should expect to see more litigation over that issue.
1851: In your experience, where do emerging franchisors tend to get tripped up from a compliance or documentation standpoint?
Heller: In light of their lack of experience with the franchising concept, I think emerging franchisors fail to understand the value and importance of a franchise agreement, the franchise disclosure document (“FDD”) and related agreements (e.g., development agreements, etc.) prepared by an experienced franchise lawyer who is aware of the various minefields that exist (and which may be exploited) by a franchisee down the road.
I have seen cases where the inclusion or omission of a single word in a clause of a franchise agreement has been determinative of the outcome of an issue. (There is even a New York court decision interpreting one of the New York franchise act provisions which turned on the placement of a comma in the language!)
1851: How should franchisors be thinking about risk management as they scale into new markets or add new unit growth strategies?
Heller: Franchisors venturing into new markets or intending to grow more broadly need to undertake a comprehensive assessment of not only the legal implications of doing so in the new market or area (such as legal developments on the state level or in the local courts) but also how well their product or service will be received in that community, who are the major competitors in that market and the availability of labor if a retail operation is involved.
1851: What distinguishes your approach or philosophy when working with franchise clients?
Heller: I think that my approach in representing clients in franchise matters can be summed up in a few words: thoroughness, creativity and “is there a better way to handle/resolve this?” I find that too often, franchisors who are established expect to address issues the way they have done many times in the past, while often, a different approach might be in their best interest.
For example, most franchisors, faced with a franchisee in default of their franchise agreement, will almost inevitably think, “Let’s terminate them.” While termination may be necessary, there are other potential avenues to consider pursuing, such as allowing the franchisee to seek to find a buyer — which, depending upon the circumstances, might benefit both the soon-to-be former franchisee (e.g., if the franchisee is paid for the business) and the franchisor (e.g., who may now get paid what the franchisee owes and who may end up with a more qualified new franchisee).
1851: Looking back, what lesson from your legal career has had the greatest impact on how you advise clients today?
Heller: Based on my federal court clerkship (which provided me great insight into how judges approach cases) and my extensive litigation and arbitration experience, the one takeaway that has significantly impacted my advice to clients is that in making decisions which impact franchisees, always apply a test of “reasonableness” and ask, “If this decision leads to a dispute, how will it be perceived by a judge or jury?” That lesson has helped me provide what I believe to be sound advice to franchise clients who frequently make major decisions affecting their franchisees and system.
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