Contact Us

Oregon Office:

Douglas D, Smith

PO Box 1034 

Sherwood, Oregon 97140-1034

Phone: (503) 840-0000

 

Utah Offices:

Bradley D. Smith

FranchiseSmith Utah, LLC

5508 West Kensington Circle

Highland, Utah 84003

Phone: (801) 615-1564

 

Douglas D. Smith

Franchise Smith, LLC

201 Red Pine Drive #4

Alpine, Utah 84004-5618

Phone: (503) 840-0000

 

Please understand that the

information contained in

this website is provided

for general information. It

may or may not reflect

the most current legal

developments and new 

business practices. It is

not provided in the course

of the attorney-client

relationship and is not

intended to be legal

advice or a substitute

for obtaining legal advice

from an experienced

franchise attorney 

related to your specific

needs and circumstances.

Your Protection

We help you protect your rights and your assets through trademarks, copyrights, and business structures. Our knowledge of intellectual property and business laws and our experience in business formations and ventures allows you to rest assured that your name and your value are safeguarded.

Legal Counsel to Teams

We advise team management and owners on the appropriate structure and steps necessary to protect and properly deal with team assets. These assets include:
 

  1. team names, marks, logos, and slogans;
  2. revenues from games, ticket sales, and sponsorships;
  3. team's players and other personnel;
  4. equipment, supplies, and facilities.

 
We counsel team management and owners on rights and obligations related to and prepare and draft the following:
 

  1. licensing and employment contracts;
  2. league participation and ownership contracts;
  3. sponsorship and advertising agreements;
  4. lease agreements and purchase agreements for property and real estate.

 
Call us today at (503) 840-0000 or (801) 615-1564 or contact us online.

Legal Counsel to Leagues and Ownership

League Structure

The Multiple-Owner Association


Many sports leagues are multiple-owner associations where an executive committee of owners and a commissioner make decisions for the group. The major decisions are ratified by the owners' vote according to league Bylaws. Basically, the owners actually own the league and the league's marks, logos, operations, etc.
 
Anti-Trust and Labor Laws


The multiple-owner association structure leads to anti-trust and labor law issues. Disgruntled players argue that a league's rules (such as salary caps, age limits, contract length limits, draft/acquisition restrictions, etc) are restraints on trade between competitors that violate anti-trust and labor laws. To avoid this, the league helps the players form a player union that bargains with the teams. The collective bargaining process can possibly provide the league and the teams with an exemption to the anti-trust laws and to help the league comply with labor laws.
 
Franchise and Business Opportunity Disclosure Laws


Although most major sports leagues follow the multiple-owner association model, there is little judicial precedence as to whether the multiple-owner association is exempted or excluded from state and federal franchise disclosure laws. In an Indiana court case, the CBA (Continental Basketball Association) was considered a franchise system and was required to comply with Indiana's state franchise disclosure law.
 
Though the federal rule for franchises and a number of state franchise laws define franchise somewhat differently, simply stated, a franchise is a continuing commercial relationship where: 1)someone pays $500 or more; 2) for the right to use another's name or marks (or is subject to another's quality s tandards in associating with another's name or marks); and 3) the mark's owner exercises a significant degree of control or assistance in the other's operations (some states only require a common marketing plan or scheme).
 
Violation of the FTC's (and many states') disclosure laws can lead to hefty fines and penalties and forced rescission of the agreements between the franchisor and its franchisees (and often the return of franchisee's initial investment).
 
To comply with federal and state franchise disclosure laws, the league must prepare a Uniform Franchise Offering Circular, register it with the pertinent state administrators, and provide each prospective team owner with the UFOC at the earlier of their first face-to-face meeting with league personnel or at least 10 business days before they pay the league any money or sign any agreements.
 
The federal rule and some state laws offer varying exemptions or exclusions from franchise disclosure or registration. These exemptions vary from law to law and often depend on the franchisor's structure, the size of the deal, or the financial magnitude, experience, or sophistication of the franchisor or franchisee.
 
A Non-Franchise Structure


To fall outside the ambit of the FTC franchise disclosure rule, the league would have to eliminate one of the three franchise prongs from its structure. This type of structure generally does not make sense. The league would have to make one of the three following alternations: 1) no name associated with the league; 2) no upfront fees above $500 for the right to participate in the league; or 3) no control or assistance by the league in scheduling, operations, league rules, game rules, marketing, etc.
 
Any attempt of this nature would have to be analyzed in reference to state business opportunity laws that apply in over half the states.
 
Conclusion


Contact us to discuss whether the multiple-owner association makes sense for your league's ownership and management. Contact us to discuss the application of state and federal franchise and business opportunity disclosure laws to your league.
 
Call us today at (503) 840-0000 or (801) 615-1564 or contact us online.