Top Franchise Lawyers: Harold Kestenbaum of Spadea & Lignana

1851 Franchise interviewed Spadea & Lignana’s Harold Kestenbaum about getting into franchise law early, the NLRB joint-employer ruling and what every franchisor should know about franchising.

About Harold Kestenbaum:

Franchise attorney Harold Kestenbaum carved out a niche in the industry early, opening his franchise law firm in the early 1980s, before firms dedicated exclusively to the franchise industry were common. In 2019, he merged his firm with Spadea & Lignana, a growing boutique firm with seven attorneys, including Kestenbaum, who represent franchisors exclusively. 

About Spadea & Lignana (from firm’s website):

Unlike many franchise law firms, we take a balanced approach by representing both franchisees and franchisors (not of the same system of course). By knowing both sides, we are better able to help our clients navigate difficult issues. We have a deep understanding of the relationship dynamics that underpin all franchise systems. Many of our partners have held senior leadership positions for national franchise brands and some were franchisees themselves.  That experience has proven invaluable in advocating on behalf of clients.  We know franchising and we can help.

1851 Franchise: How did you get into franchise law?

Harold Kestenbaum: Purely by accident. In 1977 I worked at a two-man law firm, and they had one franchise client. They told me to work with that client, so I had to learn all about franchising. In those days, you couldn’t just Google franchising, you actually had to read books, so I read every book there was about franchising. After four years, I had learned everything there was to know about franchising, so I decided to leave the firm and start my own franchise law firm, which was one of very few firms dedicated to franchise law at the time.

1851: What drew you to franchise law, and what do you enjoy about working in the field?

Kestenbaum: I love working with entrepreneurs. I believe they fuel the economy. They are smart and aggressive, and they are all out to grow their businesses. Some are young, and some aren’t so young, but they all share that passion for growing something special. 

None of my clients are huge companies, but they are all growth-oriented businesses, and I find those are the most exciting clients to work with.

1851: What is something every franchisor should know about franchise law?

Kestenbaum: Franchising is a heavily regulated method of conducting business. You need a smart lawyer who knows franchising inside and out. You can’t just hire a lawyer with a different specialization and trust that they will figure it out. I’ve seen too many businesses try to cut corners and save a little money on legal fees by hiring non-franchise lawyers to sort out their franchise legal work, and it never goes well.

1851: What is something you think every prospective franchisee should know about franchising before diving into the industry?

Kestenbaum: Franchise attorneys are not just for franchisors. Prospective franchisees should hire a franchise attorney who has experience representing franchisees and do their due diligence on every company they are looking into.

1851: What do you expect to see as a result of the new NLRB joint-employer ruling?

Kestenbaum: The new Department of Labor guidelines will go a long way to tamp down the controversy surrounding this issue. California’s AB-5 law isn’t going to help, but until it is actually litigated, we’re not going to know the true ramifications. I think most courts are going to look at the new DOL guidelines and decide that the joint-employer relationship does not exist unless it passes all four tests outlined in those guidelines.

1851: What do you think is the most interesting change happening in franchising right now?

Kestenbaum: More than the joint-employer ruling, I think the new accounting rule, ACS 606, is going to have the greatest impact on franchises. The new standards are going to affect the financial accounting for every single franchisor, and unfortunately not in a positive way.