Top Franchise Legal Players: Adam Siegelheim, Attorney for Stark & Stark

Adam Siegelheim is a specialist in franchise law, working as an attorney for New Jersey-based Stark & Stark. He has extensive experience in entity formation, financing, real estate, business acquisitions and insurance handling, and his franchising knowledge has helped both franchisors and franchisees alike. Siegelheim handles disclosure documents, franchise agreements, registration and legal compliance matters to ensure a franchise is equipped to handle any legal rigors that may come its way.

1851 Franchise: If we go back to your beginnings in your law career, what made you motivated to work with franchises?

Adam Siegelheim: I was originally a general corporate attorney, working deals that involved clients and different kinds of franchise businesses purchases. I started becoming familiar with the franchises we worked with from a legal perspective, and back then, those brands were using Uniform Franchise Offering legal documents. I stumbled across a few clients who wanted to franchise their business, and I really started to enjoy working with those brands beyond those initial documents.

1851: What do you think is the biggest legal hurdle facing the franchising industry in 2021/2022?

Siegelheim: I would say it has to do with regulatory aspects, in terms of how the government and certain states regulate and impose certain laws on franchise businesses, like joint employer details or classifications of employees. Those provisions can potentially disrupt a business model.

Some of these statutes and regulations can make it difficult for brands to conform to some essential aspects of a franchise or franchisee relationship, especially with independently owned and operated businesses.

1851: What is the most common mistake you see franchise brands making from a legal perspective?

Siegelheim: Some mistakes that brands make on the development side can come back to haunt them on the operation side in terms of the quality of the franchisee they award a franchise to. It’s important to know whether or not the [franchisee] is truly a fit, and that the brand knows how to structure its footprint.

Another common mistake is sometimes not doing a good job screening the people who are coming into a system.

It can also be dangerous if a brand is on the East Coast and decides to put locations on the West Coast before they're ready to support those locations, or vice versa. If a company is dispersed throughout the country, it sometimes can’t have the same market penetration as a brand that is developed in certain areas. That can make for a much harder time building a system.

1851: What do you love about working with franchises?

Siegelheim: I like the relationship aspect in terms of working within the confines of people who have a five-year, 10-year or sometimes 15-year commitment to operate a territory. Unless you're going to get a divorce from a brand, you have to maintain a working relationship with them. I enjoy counseling within those confines of working with clients to protect their brands and their system, while also working to help preserve their relationships with their franchisees.

1851: What is one thing you think every prospective franchisee should know before joining a franchise brand?

Siegelheim: It’s important for a franchisee to understand what it takes to be successful in the system and to set realistic expectations. For example, the operator of a children’s franchise is going to be doing marketing, managing employees and understanding what it takes to operate a business instead of working with kids as often as they might think.

It's not about sitting there and enjoying the product or service itself as a franchisee — it's the passion of running a business. You have to develop that understanding as a business owner, and you have to make yourself aware before you decide to get on board.