When two 20-something lifelong friends came up with an idea for a hot startup, they did not expect to secure legal representation from a global law firm like Holland & Knight. But thanks to Holland & Knight's innovative approach to supporting emerging businesses, the young company is getting the legal help it needs to expand and is positioning itself for future outside investment.
The company is The Free Ride, a free shuttle service founded by Alex Esposito and James Mirras that provides rides in pumped-up, six-person, open-air electric carts to the beach, restaurants, bars and hotels in the Hamptons, Asbury Park on the Jersey Shore, Fort Lauderdale and Palm Beach, as well as Santa Monica, Venice and San Diego in California. The ride is free because the company sells advertising wrapped around the shuttles and broadcasts video commercials inside. Advertisers also can offer samples of their products – drinks to thirsty beachgoers, for example. A soon-to-be launched app will make it easy for riders to find a shuttle and also provide another advertising opportunity for its clients.
The company posted double-digit growth in 2015 with revenue already in the seven figures. A new contract with Civic San Diego – the nonprofit development arm of the city that brought in The Free Ride to provide more transportation options in the city's downtown – promises substantial growth in 2016.
Holland & Knight has been able to take on the small company as a client by using a flexible fee arrangement and the strategic use of associates supervised by partners. The firm essentially is investing time in a client that it believes has great potential.
The Free Ride team is an example of how Holland & Knight brings attorneys from different disciplines together to provide value for clients. Edward Koren, the Tampa and Lakeland partner who is head of the firm's Private Wealth Services Group, has provided guidance for the firm's overall work with The Free Ride. Rich Hadlow, a partner in Tampa, has counseled in the important area of corporate restructuring and entity formation while Partner Bernie Barton in Tampa has guided the tax work. Partner Bridget McCarthy and Associate Cheryl Kang in Los Angeles negotiated a contract with Civic San Diego with assistance from Patrick Duffey, an associate in the Private Wealth Services group in Tampa. Washington D.C. Partner Thomas Brooke assisted The Free Ride with structuring the company's burgeoning intellectual property – including its trademarks, copyrights and licensing work. When regulatory issues threatened to derail contract negotiations with Civic San Diego, Washington, D.C. Associate Jameson Rice helped The Free Ride navigate California's new transportation regulatory framework.
For The Free Ride, legal services began with advising the company on corporate structure, and then extended to the protection of intellectual property, installing liability protections and structuring the business for maximum tax benefits. The goal was to protect the business and make it investable.
The Holland & Knight team recommended that the fledging company take a franchise approach to organizing its business. Although not literally a franchise, The Free Ride Inc. is the parent organization, and its owners own interests in local affiliates that provide the shuttle services. The parent company owns the app and other intellectual property associated with the brand, as well as the advertising contracts, while the local affiliates own and operate the vehicles.
The next step for Holland & Knight is to help The Free Ride founders build long-term relationships with their affiliates. Since each local operation is a partnership with a local owner, it's important to have strong contractual relationships that form an exclusive relationship between the local owner and the parent company, and ensure that all advertising and other revenue streams pass through the parent company. A uniform contract will make it easier to pick up new affiliates.
Attorneys from several of Holland & Knight's offices also have represented The Free Ride in negotiations with Civic San Diego. The city is investing in The Free Ride in order to provide more options for getting around the thriving downtown area, including shuttling fans between parking and Chargers games.
Holland & Knight has a long history of working with promising smaller companies. Most large firms have an institutional resistance to working with clients that are not big enough to immediately provide significant billings, but Holland & Knight has always seen the value in helping entrepreneurs.