Brian Schnell is a highly regarded US franchise lawyer and leads the global franchise practice at Faegre Drinker. Brian’s past experience includes serving as the COO and chief legal officer for a leading healthcare franchisor. With this unique legal and business background and a profound passion for franchising, Brian counsels both emerging and mature franchisors, ranging from companies with thousands of locations worldwide to companies in the initial stages of building franchise systems.
What motivated you to specialise in franchise law?
Initially, pure luck. My first project on my first day as a lawyer was for International Dairy Queen, a global leader in franchising. In those early years I had the good fortune of spending part of each day at Dairy Queen’s headquarters, with their in-house lawyer including me in meetings with franchise development, operations and marketing. That beginning in the trenches allowed me to develop a deep understanding of all franchising’s nuances, challenges and opportunities, resulting in my commitment to make a difference in franchising beyond the traditional legal paths. Thirty-two years later, I’ve been in franchising every single day of my professional career. Few franchise lawyers have been that fortunate.
What do you enjoy most about working in the franchise space?
The people. Working closely with franchisor leadership teams in finding creative solutions to help them effectively lead their brands and unleash the power of franchising. Nothing is more fulfilling than collaborating with clients to evolve, innovate, and protect and grow their brands amid all the external regulatory, legal and related challenges franchisors face in today’s world.
How has the market changed since you first started practising?
The speed and magnitude of change is staggering, especially when customers demand constant change. Franchisors who don’t embrace change and design a culture where franchisees embrace and implement change will fall behind their competition. With that very real dynamic, a franchisor can no longer lead with a command-and-control leadership style, but rather must adopt a collaborative leadership style where a franchisor retains decision-making authority but listens closely to franchisees and all other brand stakeholders.
You have mainly represented franchisors during your career. What insights can you offer to help others understand the experiences and challenges facing franchisees?
Embrace your role as a franchisee to be the employer of choice in your local community, and deliver on the brand promise every single day. If you have a problem with your franchisor, don’t make it personal and don’t rely on confrontation as the sole means to get what you want. Always, always, always look for common ground and exhaust meaningful dialogue before litigation, as litigation costs continue to skyrocket and rarely result in the desired outcome. By the way, I stress the last point with our franchisor clients just as forcefully.
Having worked with franchisors operating in a range of sectors, how do you ensure you maintain sector-specific knowledge to assist clients effectively?
I spend 30-45 days each year visiting with clients to understand their businesses and attending franchise events that are focused more on business rather than legal topics. We also host an annual two-day FaegreBD franchise summit where close to 200 franchisor executives, franchisee owners and franchise suppliers from more than 25 states discuss franchising’s real-world opportunities and challenges, with a focus on best practices that will move the needle in a meaningful way.
How do you see franchisors maximising M&A opportunities, given the abundance of private equity interest in the franchise market recently?
Those franchisors who find the right franchisees who fully engage in building the brand in their communities, focus on strong unit level economics and financial discipline, and exhibit an ability to effectively implement system changes will always attract private equity. From a legal perspective, compliance matters – not only franchise regulatory compliance, but also privacy/data security, intellectual property, and food safety and related regulatory matters for restaurant brands.
One of the key external challenges facing franchisors is the joint employer concern. How do you see this playing out in the future?
Those external challenges will continue in the foreseeable future. Franchisors, franchisees and all franchise advocates must educate legislators, regulators, judges and the public that the franchise business model is a significant driver in the US and global economies, and is built on franchisors empowering franchisees as independent business persons fulfilling their dreams of owning their own businesses. One key difference maker will be franchisors understanding the importance of system standards compliance to protect their trademarks and brand, without controlling the day-to-day manner a franchisee uses to meet those standards. There is no need for a franchisor to get in the middle of a franchisee’s employment matters, or tell a franchisee the day-to-day specifics of exactly what to do in the operation of their business.
What has been your greatest achievement to date?
That’s easy and a great way to close. My wife and our three daughters.