Courses

There are approximately 800,000 franchised outlets in the U.S., employing approximately 8 million workers, and generating at least $750 billion in sales. Franchising is growing: it has been estimated that a new franchise opens in the U.S. roughly every 8 minutes of every working day. But, in recent years, global expansion of franchising has been at least as rapid. Although most people may associate franchising with “fast food restaurants,” franchising is prevalent in many areas of the economy, including automotive, hotel, various retail establishments, and numerous business services. With the explosive growth of franchising, which really began in the 1950s, has come the development of franchise law as a separate discipline during the past 65 or so years and significant growth in the number of lawyers who practice in this field. Thus, franchising and the evolving practice of franchise law have a great practical impact on the U.S., and global, economies. Franchise law is a combination of contract and statutory law and is heavily influenced by trademark, antitrust, employment and other areas of business law. Franchise agreements tend to be lengthy, multi-year trademark licensing agreements. Because franchising involves distribution of goods and services, antitrust and other competition law considerations must be taken into account. Franchising is also regulated at both the federal and state levels. Franchise sales are regulated by state and federal disclosure requirements, analogous to SEC requirements. Automotive, petroleum and certain other franchise relationships are regulated by specific federal and state statutes, while various states more broadly regulate aspects of the franchise relationship, such as termination or renewal of the relationship. There is a substantial amount of litigation in franchising, involving not only disputes between franchisors and franchisees, but also disputes with consumers and others. Many common law contract concepts, such as the “implied covenant of good faith and fair dealing,” have evolved and continue to evolve in the context of franchise law. Because franchising is also growing rapidly outside the U.S., laws and regulations of other countries are also relevant. This course will cover the legal and practical business basics of franchising, including, structuring of the franchise relationship and the analysis of franchise agreements; the sales process and disclosure requirements; the relationship to franchising of trademark, antitrust, employment and other general areas of statutory law; contract and other common law concepts that affect the franchise relationship; statutes specifically regulating the franchise relationship at the state and federal level; automobile, petroleum and international franchising; franchise-related litigation; and current issues in developing franchise law. At the end of the semester, there will be mock negotiations of a franchise dispute.