146 Franchisors Cross-Examine their Legal Services

At last fall's Franchise Leadership & Development Conference in Atlanta, nearly 150 franchisees responded to a survey conducted by MulcahyLLP about their interface with outside counsel and legal issues. Here are some highlights of what those franchisors had to say. How does your law firm stack up?

Do you believe you are receiving more or less value for legal services over the past 5 years?

More than two in five (41.8%) responded that they're getting "much more" or "somewhat more" value from their law firms, while about one in three (31%) saw no change. Only 3 in 100 believe they're getting "somewhat less" value.

Approximately what percentage of your annual expenses on legal services are spent in these categories?

Compliance accounts for about one in every three dollars of franchisors' annual spending for legal services, with preventive counseling and transactional spending accounting for another 45%. Only about one dollar in 10 goes toward expenses related to litigation.

How long have you been using your primary law firm for disclosure and registration issues and annual renewals?

When it comes to relationships with outside law firms that handle disclosure, registration issues, and annual renewals, about six of 10 (61%) have been with their outside law firm for more than three years.

What is the dispute resolution section of your current franchise agreement geared to?

Nearly two thirds (63%) of the responding franchisors require their franchisees to agree to arbitrate or mediate their disputes. And while one in 10 prefer to reach a quick settlement, none wanted to get to court quickly.

Jim Mulcahy is the founding and managing partner of Mulcahy LLP, a firm dedicated to franchise and distribution law. He has more than 30 years of experience, is a seasoned trial lawyer, and is former general counsel of American Suzuki. Contact him at www.mulcahyllp.com or 949-252-9377.