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Local: 305-703-5058

Decades of Experience and Commitment to Clients as David vs. Goliath in Complex Business Litigation and All Areas of Franchise Law

Best Law Firms | Ranked By Best Lawyers | United States | Franchise law | Tier 1 | 2024

National Leading Franchise Law And Commercial Litigation Firm

Powerhouse Trial Lawyers And Strategic Problem-Solvers In Complex Business Disputes And Transactions

National Franchise Law And Commercial Litigation Firm

Zarco Einhorn Salkowski, P.A. is a full-service commercial litigation firm that is nationally recognized as a leader in protecting and enforcing the rights of franchisees, dealers, licensees and distributors. Our attorneys, experienced trial lawyers with diverse backgrounds  including economics, accounting, and finance, have been at the forefront of important legal precedent-setting cases in franchise law in both federal and state courts.

Franchise opportunities are the backbone of the American dream, helping millions of people open their own businesses with proven frameworks guiding them. For many, the venture of franchising has proven fruitful. However, the reality for too many franchisees is far from ideal. Since their objective is to increase their own profits, franchisors often have an inherent conflict of interest with franchisees, and this is especially true now in the world of private equity buying franchises.

Some franchisors become predatory, violating antitrust laws and covenants of good faith, which can turn a franchisee’s dream into a nightmare, and your life-savings into dust!

We’re ready to fight back against these practices on behalf of franchisees. Contact Zarco Einhorn Salkowski, P.A. or call us at 888-580-7844 to schedule an initial free consultation.

Representing Franchisees, Franchisee Associations, Dealers, Distributors, And Licensees

With great support from his experienced team of extraordinary attorneys for over 3 decades, Robert Zarco, often referred to as the “Franchise King,” founded Zarco Einhorn Salkowski, P.A. to fight on behalf of franchisees by ensuring that they have a level playing field against their larger counterparts, like David vs. Goliath, in negotiations and disputes so that their businesses and families can prosper. Zarco and the firm are known nationally throughout the franchise industry for their extensive experience, impressive successes, creative strategies, and legal skills with landmark cases. Mr. Zarco and his Team have a decades-long track record of solutions for clients who have been told by other attorneys that their case is hopeless. They have earned significant victories for clients, including establishing legal precedents which have paved the way for federal and state courts to understand the unique complexities of the franchise relationship.

Zarco Einhorn Salkowski, P.A., has been repeatedly in the forefront of important franchise law issues, such as encroachment and cannibalization, breach of the implied covenant of good faith and fair dealing, fraud in the inducement, fraudulent concealment, and breach of contract to name a few, in addition to statutory violations of state and federal franchise laws.

Our firm, Zarco Einhorn Salkowski, P.A., has established a stellar reputation as one of the nation’s few leading law firms dedicated to representing the rights and interests of franchisees nationwide and overseas. We understand that franchisees’ legal concerns can be especially complex and that managing those legal concerns can be the key to maintaining a franchise’s success.

We understand that franchisees often don’t have the same deep pockets as their larger adversaries, therefore our creative fee structure is often built unique to each case trying to make it affordable by avoiding the burdensome hourly fee structure typical of most other law firms. Our customized alternative blended fee arrangements may include a results-oriented partial contingency fees. Such success-based fee arrangements serves to align the financial interests of our clients and allows us to achieve the most expeditious and beneficial result possible in each case.

Franchise Law Overview

Franchising is a way for businesses to expand by offering independent franchisees the ability to use a business’s name, branding, and method of operation. Franchising offers businesses the opportunity to increase their footprint and revenue, but it limits their control over individual franchisee businesses. Franchisors usually provide training and detailed manuals to ensure that the method of operation and branding is conveyed to franchisees, in return for paying the franchisor royalties and a variety of ongoing franchise fees.

Franchised businesses usually fall into one of three categories:

  • Distributorships, where the franchisor licenses another person to sell the franchisor’s product exclusively.
  • Business format franchises, where the franchisee operates a business under the franchisor’s trade name and is generally required to follow the franchisor’s standardized operating procedures.
  • Manufacturing franchises, where the franchisor provides the franchisee with the ingredients or formula for a particular product that the franchisee will manufacture.

What Legal Needs Do Franchisees Have?

Like any business, legal needs will arise for franchisees. Whether you’ve been operating for decades, or are looking to invest, a trusted and experienced franchise attorney by your side can help guide your decisions and protect your business interests.

Our attorneys have won precedent-setting landmark cases against the largest franchisors. We’ve represented franchisees from over 500 franchise systems in over 40 states and 20 countries. We’ve also established and represented some of the largest franchisee associations in the nation in franchisor/franchisee disputes.

    • Becoming a franchisee and evaluating a franchise opportunity
    • Structuring a new franchise, including partnership, shareholder and operating agreements
    • Reviewing franchise disclosure documents (FDDs)
    • Litigating, arbitrating and mediating franchise disputes
    • Protection of exclusive territories against encroachment
    • Drafting leases, confidentiality and non-compete agreements, construction agreements and other ancillary agreements
    • Renewing existing franchise agreements
    • Facilitating franchise sales and transfers, and system exit strategies
    • Establishing and defending franchisee associations

Our attorneys have decades of experience with a proven track record and reputation for helping franchisees navigate legal landscapes and operate their businesses effectively. Contact our Miami office by calling 888-580-7844 to schedule a free initial consultation.

What Laws Govern Franchising?

Many different rules and regulatory bodies govern franchise law. In simple terms, these laws are a combination of both federal and state rules that govern the registration of franchises, the relationship between franchisors and franchisees, as well as the offer and sale of franchises. The Federal Trade Commission (FTC) oversees all aspects. From negotiations to deals and contracts, we can provide you with all the information you need.

We provide services to commercial clients with a variety of legal resolutions to business disputes and transactions.

What is a franchise disclosure document (FDD)?

The franchise disclosure document (FDD) is a document that franchisors must provide to the prospective franchisee a minimum of 10 days before the franchise agreement is signed. Under Federal Trade Commission rules, it must include a listing of all current (and recently departed) franchisees and information about the operation of the franchise. FDDs also include information on litigation history, the franchisee’s initial investment, operating expenses, advertising and termination policies. The FDD provides franchisees with an opportunity to study the investment and evaluate the franchisor before investing in the franchise.

What other kinds of agreements are commonly involved in franchising?

The foundation of a franchise is the franchise agreement (sometimes called a “license agreement”). This document lays out the relationship between franchisor and franchisee.

Additional documents may be required depending on the franchise in question. Collateral agreements may cover additional issues such as noncompetition, powers of attorney, collateral issues, software licensing and technology. Personal guarantees for the franchisee’s performance may be required. Franchisees may also be required to enter into contracts with third parties such as specific landlords and vendors in order to do business.

We cannot stress enough about the importance of having an experienced and trusted legal advocate that deeply and broadly understands franchise law by your side. Whether to help review all documents before you invest, to advise you throughout the ownership of the franchise business, or to help you leverage a business dispute with your franchisor before or while it becomes serious, your success and legal case is often only as good as the attorney and other experienced advisors by your side.

Advocating For Franchisees

We counsel our franchisee clients on all aspects of franchising, licensing, dealership, and distribution law. Our vast knowledge in business/commercial law and exceptional experience of over 30 years allow us to give franchisees creative, yet practical, advice and realistic solutions for every business challenge. We’ve done everything from helping franchisees push back against illegal encroachment issues and forced marketing programs to representing the interests of franchisee associations.

Our legal team remains dedicated to franchisees and defending their best interests. Contact our team for help with:

    • Breach of the implied covenant of good faith and fair dealing: This is an important legal principle that has a great deal of gray area. It is most obvious in instances where one party in a contract acts in ways that undermines the other and the intent of the relationship, even when their agreement may explicitly state otherwise, such as a franchisor installing rules or quotas that a franchisee cannot meet and remain in keeping with the intent of owning the business in the first place.
    • Encroachment of exclusive territories: When you operate a franchise, your local territory is extremely important to you. You don’t want to compete with an identical shop across the street or unreasonably close. If you buy into a franchise, you have a right to legally defend against your franchisor licensing additional franchisees too close to your area, especially without giving you the right to buy and build it yourself.
  • Breach of contract: Anytime your franchisor or vendors do not live up to their side of a contract, they are in breach.
  • Fraud in the inducement: This is a type of fraud where you are tricked into signing an unfavorable agreement. The fraud must be intentional and damaging to you.
  • Fraudulent concealment and other types of fraud: Fraudulent concealment is specifically the failure to disclose important, vital facts that change the nature of the contract. Any fraud involved in the contract negotiation process is damaging to you.
  • Franchise disclosure document (FDD) violations: The franchise disclosure document is a presale due-diligence document owed to every franchisee prior to a sale. However, omissions and deceptions in these disclosures can be extremely difficult for you.

With over 30 years of legal experience in all areas of franchise law, including transactions, disputes resolution, and litigation, we are well-versed in fighting back against the largest franchisors and obtaining favorable results that could mean the difference between success and failure in protecting your investment.

Like all aspects of our lives, proper mentorship and guidance is crucial, and businesses are not immune to problems. When business opportunities or disputes arise, you need a proven attorney who has real experience in that area of law. We are aggressive and strategic courtroom trial lawyer advocates with significant victories achieved for franchisees through litigation, arbitration and mediation. Most often, your case is only as good as the quality of the attorney by your side.

Dedicated To Protecting You

Our experienced attorneys are focused on providing our clients with the competent legal representation they need to enforce their legal rights and protect their businesses. Although we are always strategic and well-balanced in how we approach negotiations and dispute resolution strategies, we are also well known as aggressive courtroom trial advocates, when necessary, with significant victories achieved in trial or settlement for franchisees in litigation, arbitration and mediation.

Our founding attorney, Robert Zarco, and team of attorneys with diverse backgrounds in economics, finance, and accounting, are recognized for their extensive experience in commercial and business litigation, as well national reputation as specialists in franchise law. Our legal team is heralded for handling the most complicated business disputes and has earned a reputation for world-class legal advocacy.

We have clients from all over the world, and we are committed to providing accessible service to each of our clients. From answering frequently asked questions about franchising to constantly communicating specific information crucial to their daily business operations, we, at Zarco Einhorn Salkowski, P.A., are always putting our clients first and dedicated to representing our clients’ best interests.

Understanding that franchisees are often limited in their ability to employ high caliber advocacy, we offer an initial free consultation to understand your needs and determine how we might best assist. We also build a creative blended-fee structure unique to each case that may include a success-based contingency component, thereby aligning our interests and making our representation affordable, by avoiding the ongoing typical hourly fee structure typical of most law firms.

Connect With Us For Your Franchise Law Needs

Whether you need guidance in evaluating an investment in a business and drawing up legal documentation, or facing a commercial dispute and require expedient resolution, we are prepared to defend your business and livelihood now. We help franchisees level the playing field against franchisors in negotiations and disputes, providing an affordable key to the courthouse when necessary, to help you build a strong operational foundation and secure your financial future.

To schedule an initial free consultation, contact our office online or call us at 888-580-7844 or toll-free at 305-703-5058.

Video Table of Contents

What is a franchise disclosure document (FDD)?

Our law firm is engaged in all facets of franchising and franchise relationships. For a prospective franchisee looking to purchase a franchise, it is crucial to enlist the services of an experienced lawyer well-versed in the rules and laws governing franchising. The Federal Trade Commission mandates that each franchisee be provided with an FDD (Franchise Disclosure Document) by the franchisor. This document, containing about 23 different items of disclosure, informs the franchisee about the nature of the business, leadership, bankruptcy history, required investments, supply sources, vendors, and other essential details.

Among the critical exhibits in the FDD, the franchise agreement holds paramount importance. This agreement, which is an exhibit to the FDD, outlines the document governing the relationship between the franchisor and the franchisee. It is imperative for every prospective franchisee and their legal representatives to thoroughly read every word of the FDD, especially the franchise agreement. Failing to do so would be reckless, irresponsible, and may lead the franchisee down a regrettable path.

How can franchisees protect their market territory against Encroachment and Cannibalization?

Franchise cannibalization and encroachment pose significant challenges for franchisees. When a franchisor aims to saturate a specific market with additional stores in close proximity to existing locations, it leads to an immediate shift in sales from older stores to the newly established ones. To address this concern, franchisees are advised to negotiate, at the outset of the franchise relationship, for a protected exclusive territory surrounding their location.

Securing a written protected territory in the franchise agreement is crucial. In the absence of such a provision, unless state statutes offer exclusive territory protection, franchisors may believe and typically have the right to place competing units in close proximity to existing locations. This lack of protection could severely impact sales growth and, consequently, the profitability of franchisees.

What issues and disputes commonly give rise to franchise litigation?

Franchise litigation is considered a last resort in this law firm when seeking a remedy or relief for disputes between the franchisor and franchisee. The firm always endeavors to resolve conflicts through alternative methods before resorting to litigation. While methods such as face-to-face meetings, settlement conferences, or mediations are initially pursued, there are instances where these approaches are unsuccessful in achieving the desired remedy. In such cases, litigation becomes the ultimate recourse.

Litigation can encompass a broad range of legal claims. Declaratory actions may arise when there is disagreement over the interpretation of contractual provisions or the expectations placed on the franchisee. Breach of contract provisions may be invoked when one party fails to fulfill their obligations under the contract. The breach of the implied covenant of good faith and fair dealing is another aspect, where parties are expected not to interfere with each other’s ability to benefit from the contract. This is typically implied in most states but often tied to an express provision in the contract. Fraud claims, negligence claims, violations of statutory regulations, deceptive and unfair trade practices, as well as breaches of state pre-sale disclosure statutes are among the various claims that may emerge in franchise litigation. Additionally, certain states may have specific franchise relationship statutes, and violations of these statutes can lead to legal claims. The nature of the claims depends on the specific issues involved in each case.

What remedies are available to franchisees for Wrongful Termination of the Franchise Agreement?

If a franchisee believes they have been wrongfully terminated, the franchisor bears the obligation to demonstrate that the termination was indeed proper. The franchisee, with such a belief, can approach the court and seek a determination on the validity of the termination. Typically, when a franchisee is terminated and wishes to continue operating the business using the franchisor’s brand during the franchisor’s assessment of the termination’s propriety, the franchisor may go to court to seek a preliminary injunction. This injunction aims to halt the franchisee’s business operations, preventing further use of the brand.

During this hearing for the preliminary injunction, the franchisor must establish, before obtaining a court ruling confirming the termination’s appropriateness, that the termination was indeed proper. This process is scrutinized by franchisees and observers alike, as an unjust termination reflects poorly on the franchisor’s actions.

How can I get around a Non-Compete in my franchise agreement?

Non-compete agreements are increasingly becoming subjects of legal disputes. Employees working within a franchise who seek employment elsewhere may face challenges if bound by a non-compete, especially lower-compensated employees. For franchisees, the justification of a non-compete is enhanced if consideration or value was provided by the franchisor. However, when a franchisee, due to termination or the expiration of the franchise relationship, aims to compete in the same industry in a different state or market, they can challenge the franchisor’s attempt to restrict competition. The legitimacy of a non-compete is assessed based on factors such as clarity, reasonableness in scope (e.g., distance), and reasonableness in duration (e.g., time). Generally, longer durations and broader scopes make non-compete provisions less likely to be enforceable. These circumstances require careful consideration and appropriate weighing.

What are the benefits of joining a Franchisee Association?

Tremendous benefits are associated with forming a franchisee association for a specific brand. First and foremost, unity provides strength, creating a collective voice that ensures the franchisor recognizes a common situation shared by many franchises. This unified approach is more impactful than dealing with issues individually. While some franchisors may not appreciate franchisees joining such associations, the legal landscape, including the First Amendment and state laws, supports freedom of assembly and association. Many states have statutes recognizing franchise associations, allowing individuals to unite and assemble. Apart from a minimal financial contribution as a membership fee, the benefits significantly outweigh any potential drawbacks.

Can a franchisee get out of a franchise agreement early?

Franchise agreements typically include provisions allowing a franchisor to terminate the agreement if the franchisee fails to meet contractual terms, obligations, or standards set by the franchisor. However, it is uncommon for franchise agreements to provide a similar termination option for franchisees. Despite this, a franchisee can argue that, due to the franchisor’s negligent conduct or failure to fulfill obligations, there has been a constructive termination.

For instance, if the franchisor ceases to supply the franchisee with a proprietary product essential for business operations, and such action is deemed unjustified, the franchisee may claim constructive termination. In certain businesses, like hotel contracts, franchisees may negotiate an early exit window, allowing them to exit the agreement before its term concludes. However, such arrangements are rare as franchisors typically aim to maintain brand consistency and value over time.

What are the common mistakes made when opening and operating a new franchise?

The first mistake that franchisees commonly make when opening a new franchise is failing to read their franchise agreements. The second mistake is neglecting to speak to existing franchisees to gather insights about their experiences. Additionally, they may overlook reviewing the language in the Franchise Disclosure Document (FDD) that details prior litigation involving the franchise and franchisor over the preceding years, typically the last 10 years.

Another significant error is not actively participating in the buildout or the construction and development of the physical location. Hiring the right people is crucial, and there is a concern when franchisees deviate from the franchisor’s guidelines and standards, attempting to cut corners or assuming they know better. While there may be instances where the franchisee’s approach is valid, collaboration with the franchisor to ensure alignment with proven business methods is essential.

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Testimonial

“When we were within hours of losing our dream, our livelihood and our business, you stepped in and changed everything. We would like to convey the gratitude we feel, to have had such a professional and prepared team.”

Maryam & Carlos Miranda, Seaspice Brasserie and Lounge, 2015