Product Labeling Law: ANSI, UL, CPSC - Some Thoughts for Product Importers and Distributors

Hazardous warning labels to be used by manufacturers and product distributors when designing product labels. Product labeling lawyer discusses these issues.

Buying a Car Wash In NY or NJ: Some Thoughts for Purchasers

When buying a car wash in New York factors that must be evaluated include inventory, tunnel equipment and Car Wash Equipment

Buying a Gas Station or Car Wash you Need Landlord Consent - No Matter What the Lease Says

When buying a gas station or car wash in New York, New Jersey, Long Island, Manhattan, Staten Island, brooklyn, Queens, Nassau County or Suffolk County you should speak to a gas station lawyer or car wash attorney about the lease agreement and the necessity of obtaining landlord consent.

$22 Million New York City Entrepreneur Fund Created for Starting Businesses in New York City

An article on BusinessWeek.com by Henry Goldman reports that New York City and FirstMark Capital LLC, a private equity firm, created a $22 million fund for entrepreneurs who want to start a business in New York City.  The funds are a joint effort of both FirstMark Capital LLC (contributing $19 million) and the City of New York (contributing $3 million) to help entrepreneurs who want to open a business in New York City by providing them with early stage capital. 

The first New York City start-up company to receive funds was MyCityWay, which creates applications for iPhone, Androids and iPads.  The company received $300,000 in start-up funds and will be using the money to move their business from Jersey City, New Jersey to Manhattan; add two employees; extend applications to new markets and make the applications available to more mobile devices. 

In the current economic and political climate, a pro-business initiative promoting entrepreneurship is critical.  However, more effort is needed and while this initiative may be "promising", lets hope that its implementation serves a purpose that goes beyond "political window-dressing".  How about, pro-business and entrepreneurship tax cuts.  How about the abolition of New York States oppressive MTA tax that burdens and punishes the small business "employers" located in NYC?

Small Business Commercial Lease Agreements in New York: Limiting your Personal Guaranty may Not be Enough

When dealing with "small business" commercial lease agreements, typically, the commercial landlord will require the "personal guaranty" of the small business tenant.  Since most small businesses are owned by corporate entities that do not accumulate or maintain substantial assets commercial landlords justifiably require individual personal guarantees.  

To limit the scope of a small business owners "personal guarantee" the attorney for the tenant / small business owner will attempt to negotiate a "good guy" clause limiting the scope of the personal guaranty.  That is, the individual guarantee will be limited to past due rent and obligations that accrue "prior" to the corporate tenant satisfying certain notice and vacancy obligations.  The benefit of the "good guy" limitation is to limit the individual guarantee obligations to "past due" rent and not "future lost" rent. Unless expressly negotiated into the lease agreement itself, the good guy guaranty limitation will apply to the individual guarantor but not the corporate entity which will remain exposed to a potential claim by the landlord for future lost rent.

If your small business corporation maintains and accumulates assets and maintains business at multiple business locations then simply negotiating a "good guy" limitation into your personal guarantee may not be enough.  That is you must also protect your corporation from claims of future lost rent should you decide to terminate your lease early.

S Corp, C Corp, LLC?

If you are starting a new business or buying an existing business or franchise one critical issue that you will decide on will be what corporate entity to utilize.  Assuming that you have already made the wise decision to own and operate your business through a corporate entity (as opposed to individually owning and operating the business) your choice will, typically, be one of three options, that is:

(a) Establish a "Limited Liability Company";
(b) Establish a "S Corporation"
(c) Establish a "C Corporation"

You decision as to which corporate entity would be best for your business will require a detailed discussion with both your accountant and business lawyer  as to the "legal" and "tax" advantages/disadvantages of each entity.  While the small business owner typically proceed with "LLC's" or "S Corporations" (because both involve "pass through" tax treatment) there are nevertheless instances where a "C Corporation" may be the best vehicle.

The potential utilization of a "C Corporation" is typically overlooked and not the topic of much discussion.  However, Wall Street Journal Small Business Editor Colleen DeBaise does a good job of raising this issue in her "Small Talk" column and discussion with accountant Michael Hanley at WSJ.com.

Selecting the appropriate corporate entity will require an "individual" assessment of your personal finances, the type of business you are starting, the required capital expenditures and projections of profits and potential shareholder dividends. Your decision will have "tax implications" for may years to come - take the time to decide on the right entity.

Be Aware of Forum Selection Clauses in Vendor Agreements

When dealing with high cost technology software and equipment expenditures and investments, many business owners sign what appears to be a standard "purchase order" form or invoice without giving thought to the "small print legal terms" included in the agreement.  One such "small print" legal term that is commonly overlooked is a "forum selection clause".

Forum selection clauses basically define and restrict what states a party may or may not commence a lawsuit.  In technology and equipment contracts many vendors include a forum selection clause that favors the vendors' home state.  That is, if your vendor's home state is in California, a forum selection clause contained in your purchase order form may restrict your ability to sue that vendor only in the state of California.  So, even if you are a New York corporation and the equipment and services are delivered to you in New York, if you need to sue that vendor, you may be required to commence the lawsuit in California. 

Recommendation: have legal counsel review all "large ticket" purchase order forms.  If you choose not to have corporate counsel review these agreements then, at a minimum, before you sign anything make sure you review the fine print and cross-out any provision that restricts your ability to sue the vendor.  Cross-out forum selection clauses. 

Buying a New York or New Jersey Car Wash or Gas Station: Evaluate Potential Road Repairs

The purchase of a New York or New Jersey car wash or gas station involves a number of due diligence factors that a prospective purchaser must consider and discuss with his or her business lawyer.  In addition to evaluating these "existing due diligence" factors, such as the environmental condition of the property and the financial performance of the business, a prospective purchaser should consider the prospect of "future events" that may affect his or her newly purchased business.  In particular, in New York and New Jersey where road repairs are common events, the prospective purchaser of a car wash or gas station should consider the current condition of major roadways leading to the business and the possibility of future road repairs and construction that may affect traffic flows and future revenues.

Evaluating the prospect of "future road repairs" is not an easy task, is not a legal issue and, in most instances, cannot be verified.  However, it is critical that the prospective purchaser at least be "aware" of this potential issue.  Pay attention to surrounding traffic flows and the condition of surrounding roads.  Also, discuss this issue with your business lawyer and evaluate the necessary representations to be added to your purchase agreement.