Negotiating with a Tribe or Tribal Entity:
Practical Tips for Franchisors
Heidi McNeil Staudenmaier and Michael Coccaro
Indian gaming has exploded in the more than twenty-five
years since Congress passed the Indian Gaming Regula-
tory Act (IGRA). According to the 2014 Casino City’s In-
dian Gaming Industry Report, Indian tribes received $28.1
billion in gaming revenue in 2012.
1
Less well documen-
ted is the growth and development of non-gaming enter-
prises supported by casino customers. These enterprises,
located on tribal lands, include quick-service restaurants,
entertainment, and recreation.
The historical stigma associated with gaming has
disappeared,
2
and customers view Indian casinos as a
destination retreat where they can gamble, shop, eat,
and relax. This presents an opportunity for both a
franchisor, which can expand its g eographic footprint
and expose its brand to new customers who may not
otherwise visit their local franchisee, and a tribal fran-
chisee, which may value partnering with a franchisor
with a strong brand that is widely known to non-Indian
customers.
3
Ms. Staudenmaier
Mr. Coccaro
Heidi McNeil Staudenmaier (hstaudenmaier@swlaw.com) is a partner with Snell & Wil-
mer L.L.P. in Phoenix, where her practice emphasizes Indian law, gaming law, and business
litigation. She is listed in “Best Lawyers in America” for Native American law, gaming law,
and commercial litigation. MichaelCoccaro (mcoccaro@swlaw.com) is an attorney with Snell &
Wilmer L.L.P. in Phoenix, where his practice focuses on franchise and distribution law and
business litigation.
1. ALAN MEISTER,CASINO CITY’SINDIANGAMING INDUSTRY REPORT (Casino City Press 2014),
available at http://www.casinocitypress.com/gamingalmanac/indiangamingreport/ (last visited
May 6, 2014).
2. 2013 STATE OF THE STATES:THE AGA SURVEYOF CASINO ENTERTAINMENT (2013), available
at http://www.americangaming.org/sites/default/files/uploads/docs/aga_sos2013_fnl.pdf (last
visited May 6, 2014).
3. The authors wish to acknowledge others who have presented on this topic including, but
not limited to, Gabriel Galanda, Richard Kolman, and Craig Prusher, who presented at the 27th
Annual Forum on Franchising in 2004; and Joyce Mazero and Suzanne Loonam Trigg, who
published Non-Traditional Generation: Franchise Systems Coming of Age with New Franchisees in
New Venues,30F
RANCHISE L.J. 227 (Spring 2011).
35
Because every franchise system is unique and every tribe is unique, this
article is not intended to provide a one-size-fits-all template for franchisors
considering franchising on Indian land. Rather, it is intended to provide a
high-level picture of issues that a franchisor should consider in the context
of its own system with its own individual tribal franchisee. This article begins
with a discussion of tribal sovereignty, which informs not only the laws that
apply to a franchise on Indian land but also mechanisms for dispute resolu-
tion. Next, the article discusses the applicability of various laws—federal,
state, and tribal—that a franchisor should consider in negotiating an agree-
ment. Finally, this article concludes with a discussion of various dispute-
resolution venues if the transaction goes south.
I. Understanding the Importance and Effect of Tribal
Sovereignty
Indian tribes are domestic sovereigns, that is, individual nations enjoying
federal common law sovereign immunity.
4
As a result, an Indian tribe “is
subject to suit only where Congress has authorized the suit or where the
tribe has waived its immunity.”
5
A franchisor (or anyone else doing business
in Indian Country) must understand that absent (1) an unequivocal author-
ization from Congress
6
or (2) a clear waiver
7
of the tribe’s sovereign immu-
nity, the tribe,
8
tribal entity,
9
or tribal official or employee acting within the
scope and course of authorized employment
10
may not be subject to a lawsuit
in tribal, state, or federal court (or demand for arbitration). To protect them-
selves, franchisors must understand the scope and nature of tribal sover-
eignty and be prepared to seek during negotiations an enforceable waiver
(to both suit and enforcement) to permit recourse and remedies as deemed
necessary.
11
A. Broad Scope of Tribal Sovereignty
The U.S. Supreme Court has held that tribes “enjoy immunity from suits
on contracts, whether those contracts involve governmental or commercial
4. 25 U.S.C. § 450 (2014).
5. Kiowa Tribe of Okla. v. Mfg. Techs. Inc., 523 U.S. 751, 754 (1998).
6. Id.
7. Id.
8. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978).
9. Gavle v. Little Six, Inc., 555 N.W.2d. 284 (Minn. 1996).
10. United States v. Oregon, 657 F.2d 1009, 1013 n.8 (9th Cir. 1982).
11. See, e.g., Md. Cas. Co. v. Citizens Nat’l Bank of W. Hollywood, 361 F.2d 517 (5th Cir.
1966) (holding that the incorporated tribe was immune from garnishment proceedings because
its waiver of immunity contained within its bylaws was expressly qualified and excluded from the
waiver the levy of any judgment, lien, or attachment against tribal property); Joe v. Marcum, 621
F.2d 358 (10th Cir. 1980) (holding that allowing a garnishment proceeding to go forward would
result in the impingement of tribal sovereignty because, in part, the tribe code did not provide
for garnishment of wages as part of its judicial code authorizing the enforcement of judgments
obtained in tribal courts).
36 Franchise Law Journal • Vol. 34, No. 1 • Summer 2014
