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. WWL named Philip “Global Franchise Lawyer of the Year” at the WWL 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 attracted you to a career in franchising?
Working on a paper on the lodging industry at Harvard Business School in the 1950s, I came across a new concept called “franchising”. In my work as a trial lawyer at the FTC and then as general counsel to the Small Business Administration in the 1960s, I continued to confront the challenge of preserving the viability of independent businesses while seeking the benefits of scale. Voilà: that seemed to offer opportunities in the practice of law as well as in business.
What do clients look for in an effective franchising lawyer?
Mostly, what they look for in any lawyer: integrity; devotion to the client’s cause; hard work; knowledge of the law; and the capacity to work with others. For a franchising specialist, perhaps the additional features of immersion in the business itself; knowledge of what others are doing (unsuccessfully as well as successfully); and insights into how business trends are likely to have an impact on “the law of franchising”.
Will cross-border franchising continue to grow? And will it offer opportunities for lawyers?
Yes and yes. As to the future of international expansion through franchising, there can hardly be any dispute. Of the largest 200 US franchisors, a full 40 per cent of their units are already in other countries. And the top 10 franchisors consistently open more units internationally than domestically – indeed, while sometimes actually decreasing the domestic units.
For lawyers, the opportunities are compelling. One needs the same skills that are required in the domestic franchising arena, plus an interest in and familiarity with foreign markets and different cultures. It helps, of course, if one is an experienced (or at least enthusiastic) traveller.
What are the implications of the regulations covering joint employer liability to the field?
After a number of significant (and, from the franchisors’ perspective, negative) developments on joint employer issues over the last few years, some respite may be in sight. Both the National Labor Relations Board (NLRB) and the US Department of Labor are seeking to update and clarify standards for determining when two or more unrelated companies may be found to be a joint employer of the same employees. The NLRB is currently considering the adoption of a rule that would reinstate the more lenient standard that existed under the National Labor Relations Act prior to August 2015. The DOL’s proposed rule describes instances in which joint employment will not ordinarily be found to exist under the Fair Labor Standards Act, which includes relationships under the typical franchise model. If adopted in their present forms, these rules would likely reduce a franchisor’s risk of liability that exists under the joint employer standards currently in effect. Franchisors would be mistaken to think that the joint employer concern is only relevant in the US. Apart from the approach adopted under the recent amendments to Australia’s Fair Work Act that seek to impose certain monitoring obligations on franchisors concerning their franchisees’ labour practices, many countries have labour and employment laws with general principles that could support a joint employer claim.
How are discussions around the concept of anti-poaching currently developing in the market?
In the US, certain government authorities and private litigants have recently asserted state and federal law claims against franchisors for provisions in their franchise agreements that restrict franchisees from soliciting and/or hiring employees of other franchisees or the franchisor. In response, most franchisors have decided to remove these “anti-poaching” provisions from their franchise agreements, and have agreed not to enforce these provisions in existing franchise agreements. Franchisors may still face lawsuits, however, arising out of their prior inclusion of no-poaching provisions in their franchise agreements, based on the allegation that the provisions suppressed wages and inhibited employment mobility. Unlike the joint employer issue, however, it would be surprising if this anti-poaching debate finds a wider audience with regulators outside the US; nonetheless, it’s worth checking it out from both employment and competition law perspectives.
How has your role as general counsel of the International Franchise Association (IFA) enhanced your work in private practice?
Immeasurably. The IFA has, from inception, been at the front line of franchise developments, abroad and at home. It is an indispensable port of call for any business seeking to enter franchising, and for experienced companies when they face legal or regulatory issues that no single company can effectively address alone. The IFA general counsel has always played an integral role, with a portfolio spanning more than purely legal issues. That set of responsibilities leads to an intimate understanding of how to achieve effective legal outcomes – and, not entirely coincidentally, to at least an acquaintanceship with all the key figures in the industry as they change over the years.
Where, in your opinion, does the future of franchising in the US lie?
Inevitably, it will to some degree track the trajectory of the economy as a whole. But historically it has performed a bit better than that greater economy, in both good times and bad. I’ve always felt that that was largely due to the capacity of franchising to discern and anticipate changes in underlying business conditions, consumer sentiment and market trends – and, most importantly, to seize upon them more rapidly than a vertically integrated entity that is more heavily invested in assets. To the extent franchising can remain alert and nimble, it will continue to thrive; the underlying characteristics of franchising that have made it successful have not changed.
What advice would you give to someone looking to enter the legal profession?
Be sure you know this is what you want to do; the law is not for the uncertain or the faint of heart. Despite the pressure to specialise, don’t allow yourself to be typecast too soon; keep your options open and your horizons wide. Be prepared for a certain amount of “commodification”, but remain alert for ways in which lawyers can provide value through their experience and insights. If you are not prepared for hard work, commitment and demanding clients, you might want to think about looking for another line of work.
Philip Zeidman is identified as “a legend in franchise law” by peers in the US market, with considerable experience with franchising and privatisation matters.
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 Show, The McNeil/Lehrer Report, WorldNet, CNN 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.