Greensfelder Officer Beata Krakus was recently featured by 1851 Franchise as a 2021 Top Franchise Legal Player. Check out the publication’s interview with Beata to find out what drew her to franchising, the most common mistake franchise brands make, and what she thinks is the biggest legal hurdle facing the franchising industry in 2022.

Read the full interview

Question 1: How did you end up specializing in franchise law and what drew you to the field?

• I think like most franchise lawyers, it’s not like I went into law school dreaming of franchise law. It was a bunch of different circumstances, but if anything, if there was ever a silver lining, for me at least, with 9/11 and the recession that followed, it was that I ended up finding my passion for franchise law. I had started at a large law firm around that time and was supposed to do M&A work and corporate work, and that work all dried up with the recession that followed 9/11. So I kind of bounced around a little bit, did some bankruptcy work as well, and then somebody said, “Well, you know, you should you should check out the franchise group because they do things that are similar to corporate, so you’ll learn stuff that will be relevant.” And I kind of found the franchise group and never looked back.

Question 2: These days in 2021 and 2022, sort of the post-COVID or the ongoing COVID landscape, what do you think is the biggest hurdle facing franchisors?

• There’s one thing that I think has been going on for well over a decade right now and that’s definitely joint employer and misclassification. So, I mean we can keep talking about that forever, but I think that the new one that a lot of franchisors will have to come to grips with in the next year or so is related to how the systems have changed because of the pandemic. … Most franchisors and franchisees had to implement some kind of temporary measures during the pandemic to stay afloat, and in some cases those have turned out to be great, at least for most franchisees. But that may not be uniform, or there may be other reasons that a franchisee doesn’t want to continue that way or want to have some variation, or it doesn’t feel like this pandemic version of the system is what they bought. So for franchisors, I think it will be reviewing their agreements and thinking about the relationships of the franchisees to make sure that they can actually require these changes long term, for example.

Question 3: What is the most common mistake you see franchise brands making from a legal perspective, whether these are clients of yours or just in general?

• I think there’s as many as there are franchisors and franchisees, right? But … the ones that I tend to focus on are the ones where I have to call my litigation colleagues and say, “Hey what do we do about this?” And those also come up in a lot of different circumstances, but I would say that a lot of them kind of find their source in the franchisors and maybe franchisees not doing their diligence early on. Franchisors, especially startup franchisors, are super-eager to find new franchisees, and anybody who shows interest and is willing to sign on the dotted line … they will sell a franchise to. … It’s kind of penny-wise, pound-foolish — you get a franchisee in, but then you buy yourself a lot of issues because maybe they didn’t quite understand what the system entailed, or maybe they’re just not the right person for your system. So that leads to a lot of issues in my experience.

Question 4: So, Beata, you work with franchisors, but if you were speaking to somebody who was a prospective franchisee, somebody who was thinking about signing on with the brand, what advice might you give them?

• You know it’s almost a flip side of what I was just talking about, because it’s franchising at the end of the day. It’s a relationship … you join a brand, you join a family, and you want to make sure you know what family you’re joining, and that comes down, in a large extent, to who the franchisor is and how they operate their system. You’ll find that there’s systems out there that have very detailed controls and everything is regulated, and it’s down to how many ice cubes there should be in a soda, right? And then you have others that are not like that at all – there’s definitely a trademark, there’s a general feel for what the brand is, but they are not going to give you that support or control, depending on how you see it, and that will definitely impact the franchisees’ experience. …If you can figure that out, and it’s typically not that difficult to do, you know every FTD has a list of all franchisees in the system attached to it, so you can call the list and learn from existing franchisees what their experience is, and that should help you in figuring out what your life as a franchisee in this brand may look like.

Question 5: So final question for you, what has kept you in this field? What do you love about working with franchisors?

• It’s funny, and I suppose when I speak to younger attorneys or associates in my firm, say, that just because you like the law, you shouldn’t assume that all practice areas are created equal. And to me it’s very much the ability to be involved in — how should I say this, it’s not on the -management level as such but it’s helping problem-solve. I love problem-solving and finding creative solutions to issues that franchisors may have and kind of figuring out how to make it work. So that ability to help and that closeness that you have to your clients and to the management side of the business, I really like that, and that would definitely keep me in franchising hopefully for a long time to come.

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