US Motor Vehicle Distributor

CHALLENGE

In part as a result of the market challenges caused by the COVID-19 pandemic, an industry-leading US transportation services and motor vehicle distributor filed for Chapter 11 bankruptcy. In addition to the restructuring opportunities available in Chapter 11, the company needed options for how best to structure its national network of franchised and company-operated locations in a way that addresses both short-term capital needs and long-term stability and profitability. The company also needs to be able to implement network changes to its franchisees in order to maintain the strength and experience of a seasoned and established franchisee community.

SOLUTION

The company turned to Seyfarth for our deep knowledge of franchise system models, our expertise in franchise and related legal areas, and our business acumen and creativity. We have worked closely with the company's business and legal teams to develop a reimagined franchise program that will simplify franchise operations while simultaneously increasing franchise revenue. The goal: to build a broader and more profitable franchise system with streamlined and consolidated franchise operations, while obtaining system-wide franchisee buy-in and strengthening the franchisor-franchisee relationship.

RESULTS

The new franchise system has been rolled out to the franchisees. It will materially reduce inefficiencies and challenges for the franchisor, retain flexibility and resiliency for industry changes and fluctuations, and provide the franchisees with fair market terms and a system that breeds confidence in future consistency and growth.