Unless you are practicing in certain geographic areas, a franchisor may not have a lot of experience negotiating the entrance of a franchise into a Native American tribal venue. There are many franchise systems, however, that operate in such venues, for example, by operating outlets within casinos on tribal land. The alternative venue program at the ABA Forum on Franchising Annual Meeting this year provided a very good “Top 3 Issues List” that can be useful to a franchisor in deciding whether to enter a tribal venue:
- First, determine whether the franchisee is required to use a qualified Native American contractor or contractor approved by the tribe. If so, identify and evaluate whether the franchisee will still be able to meet system standards if it uses the contractor.
- Second, conduct full and complete due diligence to assure that the tribe actually has authority to lease the land and that the parties in the tribe that you are contracting with have the ability to enter into the transactions you contemplate. You may have to thoroughly review the governing documents of the tribe.
- Lastly, think about dispute resolution procedures. Since tribal entities are considered sovereign nations and in many cases the tribe is the franchisee you will have to assure that the tribe executes a waiver of sovereign immunity. In many cases, the franchisor should obtain local counsel in the area who has experience with the specific type of tribal law at issue. The sovereign immunity waiver needs to be enforceable and successful in avoiding tribal courts.
The Takeaway? Tribal lands in many ways are foreign countries. You wouldn’t go abroad without having experienced local franchise counsel. You should treat tribal lands in the same manner. Nonetheless, while there are many complicated issues to consider when entering a tribal venue this Top 3 List is a great place to start.