Franchise & Distribution

Stites & Harbison, PLLC’s attorneys regularly represent franchisors and franchisees in litigation, regulatory and transactional matters. The Group also has extensive experience representing manufacturers and distributors in all aspects of the sales chain, including agreements with distributors, dealers, and OEMs, and terms and conditions of purchase and sale. Representative industries include chemical, plastics, industrial recycling, industrial chain, precision balls, binding products, farm and industrial machinery, and consumer products.

The Franchise Regulatory and Transactional Practice includes a variety of recent engagements for franchisors, such as:

• Franchise Disclosure Document (FDD) preparation and amendment/revision for several large mature franchise systems.
• FDD registrations and other regulatory matters, including negotiations with State franchise administrators and attorneys general.
• Significant multi-unit franchisee workout/forbearance engagements on behalf of large franchise systems, including negotiation, documentation and enforcement.
• Development and implementation of impact guidelines and development policies for large retail franchisors.
• Franchisor advertising and marketing materials review for compliance with State regulations.
• Large-scale franchisor/company unit divestitures to franchisees and representation in franchisee-to-franchisee transfers.

Recent Distributorship Practice assignments include representing manufacturers and distributors in defaults, terminations and workouts, litigated matters and transactional counseling, including:

• Litigation and attendant dispute resolution to enforce termination of New Jersey distributor on behalf of Georgia binding products manufacturer involving analysis of New Jersey Franchise Practices Act.
• Dispute analysis and counseling for machinery manufacturer analyzing application of Kentucky’s Retail Sales of Farm Equipment Act.
• Representation of New York distributor in termination litigation against Kentucky industrial equipment manufacturer involving extra-territorial application of Kentucky Retail Sales of Farm Equipment Act.

The Group’s Franchise Litigation Practice concentrates in the representation of international, national and regional franchisors in a wide range of litigated commercial disputes, including:

• Franchise terminations, receivables recovery and system standards enforcement actions in federal and state courts, including the enforcement of trademark infringement and non-compete remedies.
• Representation of franchisors in large scale multi-unit bankruptcy cases and attendant adversary proceedings and workouts.
• Franchisor representation in third-party suits including premises liability, lease disputes, ADA disputes, consumer-initiated actions, trademark litigation and products liability cases, including related franchisee indemnification issues.

Representative Cases

• KFC Corp. v. Wagstaff Minnesota, Inc. (In re Wagstaff Minnesota, Inc.), 2012 U.S. Dist. LEXIS 372 (D. Minn. January 3, 2012), reversing bankruptcy court decision in 77 unit franchisee filing
• In re Kazi Foods of Michigan, Inc., 473 B.R. 887 (Bankr. E.D. Mich. August 4, 2011), numerous cases and disputes in 144 multi-brand franchisee bankruptcy
• Long John Silver’s, Inc. v. Nickleson, 2011 U.S. Dist. LEXIS 122110 (W.D. Ky. Oct. 21, 2011), a franchisee termination case litigated in Minnesota and Kentucky with numerous counterclaims
• Long John Silver’s, Inc. v. DIWA III, Inc., et. al, 650 F. Supp. 2d 612 (E.D. Ky. 2009)
• KFC U.S. Properties, Inc. v. Paris Packaging, Inc., 2010 U.S. Dist. LEXIS 16843 (W.D. Ky. Feb. 25, 2010)
• Long John Silver’s, Inc. v. Nickleson, 2011 U.S. Dist. LEXIS 122110 (W.D. Ky. Oct. 21, 2011)
• KFC Corp. v. Kazi, 2012 U.S. Dist. LEXIS 180424 (W.D. Ky. Dec. 20, 2012)
• Long John Silver’s, Inc. v. Nickleson, 2013 U.S. Dist. LEXIS 2010 (W.D. Ky. Jan. 7, 2013)
• Long John Silver’s, Inc. v. Nickleson, 923 F. Supp. 2d 1004 (W.D. Ky. 2013)
• Long John Silver’s, Inc. v. Nickleson, 2013 U.S. Dist. LEXIS 31455 (W.D. Ky. March 6, 2013)
• Long John Silver’s, Inc. v. Nickleson, 2013 U.S. Dist. LEXIS 60574 (W.D. Ky. Apr. 26, 2013)
• KFC Corp. v. Kazi, 2013 U.S. Dist. LEXIS 69004 (W.D. Ky. May 15, 2013)
• KFC Corp. v. Kazi, 2013 U.S. Dist. LEXIS 72258 (W.D. Ky. May 22, 2013)