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Thought Leaders

Thought Leaders

Philip F Zeidman

Philip F Zeidman

DLA Piper LLP (US)500 Eighth Street NWWashingtonDistrict of ColumbiaUSA20004

Thought Leader

Thought Leaders Global Elite - Franchise 2021

Q&A

WWL Ranking: Global Elite Thought Leader

WWL says

Philip Zeidman is identified as “a legend in franchise law” by peers in the US market, with considerable experience with franchising and privatisation matters.

Questions & Answers

Philip F Zeidman is a senior partner in the Washington, DC office of DLA Piper. He devotes his practice to domestic franchising law and the rapidly growing field of international distribution, licensing and franchising law. Who’s Who Legal named Philip the Global Franchise Lawyer of the Year at the Who’s Who Legal Awards for nine consecutive years, reporting that when it tallied the votes, Philip “received more votes from clients and peers in the course of the research than any other individual worldwide”. In May 2017, at a ceremony in London it named him the recipient of its Lifetime Achievement Award.

What inspired you to pursue a legal career?

As college drew to an end it seemed to me that legal training opened more doors than any other pursuit. That turned out to be the case, and it enriched my other interests –politics, current events, international developments. I have never regretted that choice, and I’ve been fortunate that my work afforded me ample scope to pursue those other interests simultaneously.

What led you specifically into franchising law?

The real attraction was less to franchise law than to franchising itself. The courses I took in business school while in law school, my work at the Federal Trade Commission and at the Small Business Administration all coalesced in an interest in how independent businesses could compete more effectively. The technique of franchising seemed the most promising. It still does.

What further changes in the treatment of “joint employer” claims do you anticipate mid to short term?  

The assertion that a franchisor is the “joint employer” with a franchisee of the franchisee’s employees has been discussed in Thought Leaders volumes. It typically arises in the context of the Fair Labor Standards Act, seeking to treat the relationship as a form of “control,” sufficient to hold the franchisor liable for the franchisee’s violation of the Act. There have been many litigated claims, but none has yet been successful. As a federal court recently noted, “plaintiffs face a hard road when seeking to impose joint liability on franchisors”. These claims will undoubtedly continue, and franchisors must continue ensuring that they do not exercise inappropriate controls. But the story is far from over; that same court recently decided to overturn the Labor Department’s joint employer regulation, which would have narrowed the scope of the joint employer standards. Nonetheless, the record to date indeed portends “a hard road” for plaintiffs.

Where do we stand on “antipoaching,” and how does the future look?

The “no poach” prohibition was a standard provision in many franchise agreements, restricting franchisees from soliciting or hiring employees of the franchisor or of other franchisees in the system. Traditionally enforced to prevent “cannibalisation” and “free-riding,” the provision has recently come under scrutiny under the antitrust laws, at both the federal level and in numerous states in response to labour activists, as suppressing the mobility of employees. The most sustained initiative has been in the state of Washington which, beginning in 2018, sought to eliminate such provisions both within the state and beyond. It led to 200 franchisors signing “Assurances of Discontinuation,” involving almost 200,000 locations nationwide, agreeing not to enforce such provisions and to remove them from future agreements. The assurances were almost uniformly accepted by franchisors even if there were grounds to dispute them, probably because the provisions were rarely enforced and not viewed as essential.

How has covid-19 affected the US franchise space? How has the industry dealt with government programs designed to address its economic effects?

Franchising cannot be detached from the larger economy which has suffered historic setbacks from covid-19. But franchisees (and most franchisors) are predominantly small businesses, and thus disproportionately affected - especially those in the retail, hospitality and service sectors. Franchisors have had to deal with issues of force majeure; with re-evaluation of their financial performance representations; and, indeed, with the need to reconsider some fundamental features of their business model. Franchising companies have availed themselves of the covid-19-related rescue or assistance programs provided by governments: potentially forgivable loans in the United States, and similar programs in, among other countries, Italy, South Korea and Japan. It is clear that, without these relief programs, many more franchising companies would have failed.

The last year seemed like an unusually busy period of franchising legislation and regulation. Can one derive any conclusions from this burst of activity?

It has indeed been a particularly active period. In some countries governmental actions were the first steps to regulate franchising there, perhaps a reflection of a perceived need to demonstrate modernity (Saudi Arabia, Thailand, the Netherlands). In other countries (including Australia, Brazil, Indonesia and Ontario), existing laws were amended, sometimes significantly. Except for the welcome growth in acceptance of a presale disclosure approach, these new laws and regulations followed no discernible pattern, thus underscoring the need for franchise practitioners to remain alert to developments around the globe.  

What aspect of your work do you find most satisfying?

The interaction with entrepreneurs either initiating a concept or responding to emerging opportunities. In the beginning stages of my career those were individuals with more adrenaline than money. Nowadays it’s more likely to be a mid-level manager in a large corporation. Both these experiences are challenging; but, frankly, it was more fun earlier.

What has been your greatest professional achievement to date?

When I was 30, and the youngest chief legal officer in the United States government, I received the Younger Federal Lawyer Award, presented by Thurgood Marshall. A half century later, at a formal ceremony in London, Who’s Who Legal gave me its Lifetime Achievement Award. Those two bookends of my career were a product of my sheer good fortune to be blessed with the opportunities I have been given.

Global Leader

Franchise 2020

Professional Biography

WWL Ranking: Global Elite Thought Leader

WWL says

Philip Zeidman is identified as “a legend in franchise law” by peers in the US market, with considerable experience with franchising and privatisation matters.

Biography

Philip F Zeidman is a senior partner in the Washington, DC office of DLA Piper. He devotes his practice to domestic franchising law and the rapidly growing field of international distribution, licensing and franchising law. Who's Who Legal named Philip the Global Franchise Lawyer of the Year at the Who's Who Legal Awards for nine consecutive years, reporting that when it tallied the votes, Philip "received more votes from clients and peers in the course of the research than any other individual worldwide". In May 2017, at a ceremony in London it named him the recipient of its Lifetime Achievement Award.

Mr Zeidman has served as general counsel to the International Franchise Association for virtually his entire career; he received its Free Enterprise Award in 2016. He has also served as special counsel for the Japanese Franchise Association and counsel to a number of US and foreign companies and trade associations. He served as the first chairman of the American Bar Association's antitrust law section's distribution and franchising committee, and as chairman of the franchising law committee of the American Intellectual Property Law Association.

He has been elected honorary life member of the International Bar Association and has served as chairman of the Association's international franchising committee, vice chairman of its Asia Pacific forum, liaison to its Latin American/Caribbean steering group and representative on its general professional programme committee. He served as president of the International Bar Association Foundation. He has been elected a trustee of EyeWitness to Atrocities, a London­based trust created by the association to harness technology to bring perpetrators of war crimes and crimes against humanity to justice.

Mr Zeidman has written extensively on the subject of international franchising, distribution and licensing, including regular columns in Franchise Times. He has also written for Franchising World and Global Competition Review. He is the author of Aspects of the Market Economy: Franchising, which has been translated into Russian and also serves as a textbook for courses on entrepreneurism in eastern Europe. Mr Zeidman also served as the general editor of the American Bar Association's Survey of Laws and Regulations Affecting International Franchising; associate editor of the International Journal of Franchising and Distribution Law; and consulting editor of CCH's Global Franchising Alert and Getting the Deal Through: Franchise. Mr Zeidman is the editor of Legal Aspects of Selling and Buying (Thomson/Reuters) and Franchising: Regulation of Buying and Selling a Franchise (Bureau of National Affairs). He has written for publications including The Asian Wall Street Journal and Worldlink, and has been interviewed on such television programmes as The Today ShowThe McNeil/Lehrer ReportWorldNetCNN Asian Business Report and the CNN financial network, CNNfn. He served as a contributing editor for antitrust and trade regulation of The Legal Times and as a member of the advisory board of the Bureau of National Affairs' antitrust and trade regulation report. For 21 years Mr Zeidman chaired both the annual New York Law Journal distribution seminar and the annual bi-coastal franchising symposium, which then became the franchising segment of the annual Practicing Law Institute advanced antitrust seminars.

Mr Zeidman has spoken at the World Economic Forum in Davos, Switzerland. He presented "With the Best of Intentions: Observations on the International Regulation of Franchising" at Stanford Law School, published in Stanford Journal of Law, Business & Finance, for which he was the recipient of the Burton Award for Excellence in Legal Writing, presented at the Library of Congress.

Mr Zeidman has engaged in a transactional practice, testified on franchising before governmental bodies, participated in judicial and administrative proceedings, taught at universities and appeared before business and professional groups in 35 countries around the world and before the Commission of the European Union, as well as before numerous US congressional committees. He has advised a number of government bodies on franchising as a technique for international development and the privatisation of state-owned enterprises: these include the Organisation for Economic Cooperation and Development (Paris), on work in central and eastern Europe; the World Intellectual Property Organization (Geneva), assisting in the development of its franchising guide for developing countries; the International Centre for Public Enterprises (Ljubljana), helping to create an international franchising databank for use in transitional economies; the International Executive Service Corps, introducing franchising into Morocco; Unidroit, a UN-affiliated agency (Rome), advising on the regulation of international franchising; the US Agency for International Development, working with the Indian government to assist black entrepreneurs in post-apartheid South Africa and assisting the privatisation agencies of the former Soviet Union; the Middle East Investment Initiative, to introduce franchising into Tunisia; and the World Bank, on franchising as a non-equity mode of investment in developing countries. He served on the International Chamber of Commerce's working group on franchising (Paris).

Prior to entering private practice, Mr Zeidman served in several positions with the United States government, including trial lawyer, Federal Trade Commission, general counsel, small business administration; and special assistant to the vice president of the United States.

Mr Zeidman has been admitted to practise before the US Supreme Court and in the District of Columbia, New York, Florida and Alabama. He graduated with honours from Yale College, where he was named Scholar of the First Rank. He was elected chairman of his class council at Yale, received its first Distinguished Service Award and was named its representative to the association of Yale alumni. He received his law degree from Harvard University and also studied at the Harvard Graduate School of Business Administration. Mr Zeidman has served as a member of the advisory board of the Yale School of Management; a trustee of the Yale-China Association; and a member of the advisory board of the DeWitt Wallace Center for Communications and Journalism of the Terry Sanford Institute for Public Policy of Duke University. He is a founding member of the Appleseed Foundation and has served as its general counsel. Mr Zeidman has been named a member of the Advisory Board to New Perimeter, the DLA Piper non­profit subsidiary, which conducts a wide­ ranging cross­ border pro bono practice.

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