The Internicola Law Firm, P.C. Blog http://www.franchiselawsolutions.com/blog/ The Internicola Law Firm, P.C. Blog en-us 2012 The Internicola Law Firm, P.C., All Rights Reserved, Reproduced with Permission http://www.franchiselawsolutions.com/blog/ Fri, 18 May 2012 04:46:00 GMT The Internicola Law Firm, P.C. Blog http://www.franchiselawsolutions.com/images/logoprint.gif http://www.franchiselawsolutions.com/blog/ <![CDATA[Franchise Development Companies verses Franchise Lawyers: Who is Accountable (Really Accountable) for Starting Your Franchise?]]> Many of my clients are "existing franchisors" who have already established their franchise system but want to make changes to their FDD.  The changes that I am talking about are not minor changes but, rather, changes that take their franchise agreement and FDD from the  "generic" documents that they are and convert them into agreements and disclosures that reflect the true nature of the franchise system.  Most significantly, clients want us to take their FDD and convert it into a working tool and blueprint that actually reflects their business.

Starting a franchise or have an existing franchise? We recommend reading:
"The Franchise Formula: A Guide for Franchising your Business in the New Economy"

So, why is a portion of this blog post titled "Franchise Development Companies verses Franchise Lawyers".  First, there is no direct conflict between the two and each possesses an absolutely legitimate role of establishing a franchise for many start-up franchisors.  However, many times when speaking with certain clients who have worked with certain (but not all) development companies advise that they were confused with the franchise attorneys role.  Statements that I have been told, include:

(a) The development company had their own lawyer prepare documents.  I was told by the lawyer that I could ask him questions but I was warned by the attorney that "he did not represent anyone" and that his role was  to prepare documents.  This client further stated that in terms of developing the FDD and my options in setting up my system, "the attorney was not an advocate, he simply prepared forms";

(b) The development company had their own lawyer who reviewed the documents but did not communicate with me.

Basically, in the instances that I mention, the clients explanation as to why they didn't adopted or consider alternative approaches – approaches that they are now looking to adopt  (i.e., like establishing unique criteria for designating a protected territory, adopting an alternative royalty structure or differentiating franchise offerings) - is simply that they didn't know that they had options.  One client explained it the best when she stated "…the attorney [provided / referred by the development company]  told me he did not represent anyone and that his role was to prepare documents for my review.  He would answer direct questions that I asked him but he would limit his response to the document he prepared and not about the franchise system that I was looking to establish. The development company attorney was not an advocate for me".

Lets be clear, I do not speak about all development companies, but I do note some of my thoughts:

  • The role of a franchise lawyer is not to provide you with forms and generalized information and document ion but, rather, to engage in a "development" process with you that starts off with an understanding of your business, your goals and the underlying systems and assets that have made your business a success;
  • The role of a franchise lawyer, is to guide you and work with you toward the development of a franchise system, FDD and Franchise Agreement that reflects your business and serves as a blueprint for the roll out of your franchise system;
  • The role of a franchise lawyer is to understand why you are franchising your business, the significance of the step that you are about to take and to serve as a "franchise advocate" for the successful development of your franchise system.

I am certainly not referring to all development companies and the issues that I raise may apply equally to disinterested franchise lawyers.  However, always question – in addition to credentials – whether or not the franchise lawyer that you work with (either directly or indirectly) truly understands what is at stake.  Also, consider whether or not that attorney will be there for you when you have a question after the launch of your franchise or two years after that?

Continue reading information for Existing Franchisors
Continue reading information for Start-up Franchisors

]]> http://www.franchiselawsolutions.com/blog/franchise%2Ddevelopment%2Dcompanies%2Dverses%2Dfranchise%2Dlawyers%2Dwho%2Dis%2Daccountable%2Dreally%2Daccountable%2Ecfm www.franchiselawsolutions.com-81767 Wed, 16 May 2012 08:00:00 GMT <![CDATA[Buying a Franchise: "Are you Wasting your Money if You Speak to a Franchise Lawyer"?]]> This morning I spoke to a franchisee who spent hundreds of thousands of dollars buying a franchise and establishing its operations.  The franchisee is currently experiencing losses and is extremely dissatisfied with the lack of support by the franchisor and issues involving encroachment and lost sales to corporate owned stores.  Significantly, the franchisee did not review the franchise agreement prior to buying.  When I asked the franchisee why, I received the following response:

Because the franchisor's representative told me "you can get an attorney if you want but you would just be wasting your money because we will not make changes to the franchise agreement".

Buying a franchise? We recommend reading:
"An Entrepreneurs Guide to Purchasing a Business or Franchise"

Lets think about this.  First, many franchisors make this statement, yet, during the latter stages of the negotiation process, they do make changes.  Second, and more importantly, a legal review of your franchise agreement and the franchisor's FDD is a critical part of the "due diligence" process that you must take before you buy a franchise.

I know for a fact that many of the issues that I discussed with this franchisee would have been addressed in our FDD review.  In fact, many of the issues that the franchisee mentioned are, more often than not, topics of conversation that I have with my franchisee clients.

So, before you buy a franchise, consider that every step of the due diligence process (including review by a franchise lawyer) is critical to equipping yourself with the necessary information to make the right decision.

Continue reading about Buying a Franchise

]]> http://www.franchiselawsolutions.com/blog/buying%2Da%2Dfranchise%2Dare%2Dyou%2Dwasting%2Dyour%2Dmoney%2Dif%2Dyou%2Dspeak%2Dto%2Da%2Dfranchise%2Dlawyer%2Ecfm www.franchiselawsolutions.com-81835 Wed, 16 May 2012 08:00:00 GMT <![CDATA[Buying a New York or New Jersey Gas Station: Due Diligence]]> During a conversation with some "gas station" clients this afternoon, one selling a New Jersey gas station and one purchasing a New York gas station, a few points (two in particular) came to mind regarding pre-purchase gas station due diligence.  Here are the two points that you should consider in terms of due diligence:

Buying a Gas Station? We recomment reading:
"An Entrepreneurs Guide to Purchasing a Business or Franchise"

1.  When evaluating fuel sales and profitability, consider and, incorporate into your analysis, the fact that as a fuel dealer when you purchase inventory you will be required to pay various taxes.  According to my client, these taxes typically amount to approximately $0.59 per gallon and, in New York City, include federal tax, state tax, city tax, gross receipts tax and spill tax; and

2.  When considering profitability, you must evaluate the credit card fees typically incurred by the station.  That is, what percentage of sales are paid by credit cards and what credit cards are being used.  Keep in mind that credit card charges reduce your per gallon margins.

For additional articles and information about buying or selling a New York or New Jersey gas station, we recommend the following articles:

Factors to Consider When Buying a Gas Station

Buying a New York or New Jersey Car Wash or Gas Station: The Importance of An Environmental Site

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

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

To schedule an appointment with Charles Internicola call 1-800-976-4904 or click here to contact us by email

]]> http://www.franchiselawsolutions.com/blog/buying%2Da%2Dnew%2Dyork%2Dor%2Dnew%2Djersey%2Dgas%2Dstation%2Ddue%2Ddiligence%2Ecfm www.franchiselawsolutions.com-81646 Tue, 15 May 2012 08:00:00 GMT <![CDATA[Starting a Franchise: Random But Important Questions to Consider]]> Having finished a conference call this morning with a well informed client about his business and the Franchise System that we are establishing, a number of random, but nevertheless important, questions came to mind.  These questions (plus many others) are outlined in the interactive questionnaire that our start-up franchisor clients complete.  A few of the many questions or factors that your should be considering – if you wish to franchise your business – include:
  • Specifications for Proprietary Equipment - if your business features or utilizes specialized or highly visible equipment (whether a specialized oven or a medical testing device, consider what specific models that the franchisee will be required to purchase and what suppliers will you approve as your exclusive suppliers.

  • Point of Sale Systems – If you use a point of sale system or will be requiring your franchisees to use one, be aware that your FDD will require detailed disclosuer of the point of sale system that franchisees will be required to purchase.  This detail must include, equipment model numbers and also software version numbers.

  • Proprietary Products – Note every ingredient, product or service is "proprietary".  However, your business does possess proprietary components and it is critical that you evaluate those critical products, services and/or ingredients that are so critical to your business that you must designate them as "proprietary" and control the sale and distribution of these items to your franchisees.  Consider whether or not suppliers may even private label these items with your trademarks and trade name.

  • Training – Although your franchise attorney will review with you the "technical" FDD disclosure requirements, start writing down the training program that you will implement and require all franchisees to complete "prior" to opening their franchise.  Consider that a good training program is critical to the success of a franchise.
There are many other factors, but these should provide you with a good start.  Also, one important tip: write down your answers, review your answers and, if necessary, modify your answers.
 
Good luck.
 
]]> http://www.franchiselawsolutions.com/blog/starting%2Da%2Dfranchise%2Drandom%2Dbut%2Dimportant%2Dquestions%2Dto%2Dconsider%2Ecfm www.franchiselawsolutions.com-81236 Thu, 10 May 2012 08:00:00 GMT <![CDATA[The Decision to Become a Franchisor: What to Evaluate when Franchising Your Business]]> When it comes to "expanding your business" and determining the right expansion model, "franchising" and the concept of "franchising your business" is almost something that you must evaluate and consider.  When "franchising" works, it works extremely all.  However, franchising is not right for every business and before you make the decision to "become a franchisor" or "franchise your business" you must build a solid foundation about the advantages and disadvantages of franchising and what steps are required to franchise your business. 

We strongly recommend the following information and articles:

]]> http://www.franchiselawsolutions.com/blog/the%2Ddecision%2Dto%2Dbecome%2Da%2Dfranchisor%2Dwhat%2Dto%2Devaluate%2Dwhen%2Dfranchising%2Dyour%2Dbusiness%2Ecfm www.franchiselawsolutions.com-80761 Wed, 02 May 2012 08:00:00 GMT <![CDATA[Top 5 Hair Franchises to Buy in 2012]]>

If you are considering buying a franchise we recommend reading:
“The Entrepreneurs Guide to Purchasing a Business or Franchise”

Recently The Entrepreneur released the 2012 Franchise 500 list. The top 5 hair care franchises are listed below:

Rank            Franchise Name                    Startup Cost
1                  Supercuts                               $106.05K – 199K
2                  Great Clips                              $108.35K – 203.5K
3                  Sport Clips                              $153.2K – 276.9K
4                  Cost Cutters Family Hair Care $88.5K – 180.1K
5                   Pro-Cuts Classic                     $94.5K – 184.6K
Prior to purchasing any franchise it is important to carefully investigate and evaluate the franchise opportunity.  
Continue reading about Buying a Franchise
]]> http://www.franchiselawsolutions.com/blog/top%2D5%2Dhair%2Dfranchises%2Dto%2Dbuy%2Din%2D2012%2Ecfm www.franchiselawsolutions.com-80129 Tue, 24 Apr 2012 08:00:00 GMT <![CDATA[Franchises to Buy for Under $100,000 in 2012]]> A growing number of the population is becoming interested in buying a franchise but it can be costly and certain franchises may be out of the price range for some prospective franchisees interested in purchasing one.

Interested in Buying a Franchise? We recommend reading:
“An Entrepreneurs Guide to Purchasing a Business or Franchise”

According to a recent article by Fox Business here are nine franchises to buy for under $100,000 in 2012:

1) Home Helpers – A home care and personal emergency response system – Initial Investment: Between $50,000 and $75,000 for a Home Helpers franchise or between $50,000 and $90,000 for both Home Helpers and Direct Link.

2) The Growth Coach – A business and sales coaching system – Initial investment amount about $50,000 in the first year and then an additional $500 a month for royalty fees.

3) The British Swim School – A swim instruction company that operates out of exiting pool and fitness clubs franchise – Initial investment is between $25,000 and $50,000 including operational costs.

4) Painting With a Twist – An art studio that hosts art parties with a “twist” – Initial investment is about $75,000 including the franchise fee, studio and art copyrights.

5) Weed Man – A lawn and garden care franchise company – Initial investment ranges between $73,700 to $58,450.

6) Caring Transitions – A senior moving, relocation and downsizing company – Initial investment is approximately $40,000.

7) EnviroTech Pest Services – A pest management franchise company – Initial investment is between $40,000 and $90,000.

8) Doc Popcorn – A fresh, natural-flavored popcorn company – Initial investment is approximately $70,000.

9) PuroClean – A property damage remediation company – Initial investments can range from $74,260 to $99,375. 

It is important to keep in mind to fully investigate the franchise prior to making a decision to purchase.   Does the franchise have a low failure rate? What do current and former franchisees have to say about the franchise system? Answering questions such as these can help you avoid a potentially bad franchise prior to investing your time and money into it. Remember a low start-up costs mean very little if a franchise has a high failure rate or poor systems in place. 

Continue reading about the process of Buying a Franchise

]]> http://www.franchiselawsolutions.com/blog/franchises%2Dto%2Dbuy%2Dfor%2Dunder%2D100%2D000%2Din%2D2012%2Ecfm www.franchiselawsolutions.com-79448 Mon, 16 Apr 2012 08:00:00 GMT <![CDATA[Top 5 Fitness Franchise Opportunities to Buy in 2012]]>

For additional information about buying a franchise we recommend reading:
"An Entrepreneurs Guide to Purchasing a Business or Franchise"

Below are a few fitness franchises that have low failure rates according to the Small Business Association:

Ranking           Franchise Name                          Startup Costs
1                      Anytime Fitness Center                $46.3K – 321.9K
2                      Jazzercise Inc.                              $2.98K – 76.5K
3                      Snap Fitness Inc.                          $76.11K – 361.7K
4                      Planet Fitness                               $673.1K – 1.66M
5                      Gold’s Gym                                    $898.5K – 3.89M
Continue reading about Buying a Franchise
]]> http://www.franchiselawsolutions.com/blog/top%2D5%2Dfitness%2Dfranchise%2Dopportunities%2Dto%2Dbuy%2Din%2D2012%2Ecfm www.franchiselawsolutions.com-79026 Mon, 09 Apr 2012 08:00:00 GMT <![CDATA[Buying a Franchise: Home Health Care Franchises Becoming More Popular]]>

Interested in Buying a Franchise? We recommend reading:
“An Entrepreneurs Guide to Purchasing a Business or Franchise”

Buying a Home Health Care Franchise
There are approximately 8,000 people in America turning 65 every day this year making this type of service a necessity for many rather than an optional luxury.  A home health care franchise has the ability to not only offer a unique service but also allows for trust in a branded company when compared to a non-franchised home health care business.
Individuals considering purchasing a home health care franchise should keep in mind there are medical and non-medical home health care franchises.  A recent Fox Small Business article featuring information concerning home health care franchises in which franchisor of Nautilus Senior Home Care, Patty Catanzero, mentions it is beneficial to become part of a home health care franchise which offers both medical and non-medical services. Patty Catanzero said “If you don’t, you will only be able to get half of the money for the patient compared to what care is needed. Many franchisees get scared when they see the word ‘medical’”.  Ultimately the decision whether to purchase a medical or non-medical franchise or a mixture of both can only be best decided by you but once this decision has been made it will make it easier to narrow down which home health care franchise is right for you.

Continue reading about the Process Involved in Buying a Franchise

]]> http://www.franchiselawsolutions.com/blog/buying%2Da%2Dfranchise%2Dhome%2Dhealth%2Dcare%2Dfranchises%2Dbecoming%2Dmore%2Dpopular%2Ecfm www.franchiselawsolutions.com-79045 Mon, 09 Apr 2012 08:00:00 GMT <![CDATA[Fitness Franchise Expands to Indiana]]> MarketWatch. The expansion of the fitness franchise into Indiana will mark the 9th state for the franchise to expand to.  Once opened, the franchise will have a total of 42 locations in nine states.
Farrell’s eXtreme Bodyshaping offers a unique concept which incorporates strength training with fitness kickboxing and, according to the franchise, has helped over 36,000 students transform their lives with 10,000 of those students becoming new participants in 2011 alone.

Expansion is a healthy step for any successful franchise concept. Franchisors interested in expansion into a new state should consider the franchise registration laws that may be in effect for that state. Some states require franchisors to register a franchise prior to selling or offering to sell in that particular state.

Continue reading about State Franchise Laws when Expanding a Franchise

  
For additional information on franchise expansion we recommend reading:
"The Franchise Formula: A Guide for Franchising Your Business in the New Economy"

]]> http://www.franchiselawsolutions.com/blog/fitness%2Dfranchise%2Dexpands%2Dto%2Dindiana%2Ecfm www.franchiselawsolutions.com-78800 Wed, 04 Apr 2012 08:00:00 GMT <![CDATA[Massachusetts Franchise Bill Proposed Concerning Franchise Terminations: What does S.1843 Mean for Franchisors]]>
If passed, Massachusetts bill S.1843 would require that franchisors abide by the proposed law in an attempt for the state to protect franchisees which would have the following terms according to the details of the bill:

•    A franchisor cannot (directly or through an officer, agent or employee) terminate a franchise without good cause which includes (but isn’t limited to) the franchisee’s refusal or failure to comply substantially with any material and reasonable obligation of the franchise agreement;
•    Prior to termination of a franchise, the franchisor shall give the franchisee written notice of the termination at least 90 days in advance of the termination. The 90 day advanced written notice for termination will not apply if the reason for termination because: (1) the alleged grounds were voluntary abandonment by the franchisee of the franchise relationship, in which event, such notice may be given 15 days in advance of the termination, cancellation, or failure to renew; or (2) the alleged grounds are the conviction of the franchisee in a court of competent jurisdiction of an offense punishable by a term of imprisonment in excess of 1 year and directly related to the business conduct pursuant to the franchise, in which event, notice may be given at any time following the conviction and shall be effective upon delivery and written receipt of the notice;
•    A franchisor cannot (directly or through an officer, agent or employee) fail to renew a franchise, except for good cause shown which includes, but is not limited to, the franchisee’s refusal or failure to comply substantially with any material and reasonable obligation of the franchise agreement.
•    The franchisor is obligated to act in good faith and shall not refuse to renew a franchise for arbitrary or capricious reasons. For the purposes of non-renewal, “good cause” is defined as based upon legitimate business reason, and includes the franchisee’s failure to comply with any material lawful requirement contained in the franchise agreement;
•    Before non-renewal of the franchise, the franchisor shall give the franchisee written of the non-renewal at least 90 days in advance of the non-renewal with cause stated;
•    A franchisor that develops a new outlet or location which has an adverse impact on the gross sales of an existing franchisee’s outlet or location will be liable to the affected franchisee for monetary damages, unless any of the following are applicable: (1) the franchisor first officers the new outlet or location to the existing franchisee and/or (2) at the time the new outlet or location is developed, the existing franchisee is not in compliance with the franchisor’s current reasonable criteria for new franchisees;
•    Upon termination of a franchise for whatever cause or reason, except voluntary relinquishment or abandonment of the franchise by the franchisee, the franchisor must fairly compensate the franchisee or franchisee’s estate for the fair market value at the time of termination of the franchise, of the franchisee’s inventory, supplies, equipment and furnishing purchased by the franchisee from the franchisor or its approved sources and good will, if any, exclusive of personalized items which have no value to the franchisor and inventory, supplies, equipment and furnishing purchased by the franchisee from the franchisor or its approved sources; and
•    A franchisor will not terminate or fail to renew a franchise for the failure or refusal of the franchisee to (1) refusal to take part in promotional campaigns of the franchisor’s products, (2) failure to meet sales quotas suggested by the franchisor, (3) refusal to sell any products at a price suggested by the franchisor or supplier, (4) refusal to keep the premises open and operating during those hours which are documented by the franchisee to be unprofitable to the franchisee or to preclude the franchisee from establishing his own hours of operation beyond the hours of 10 p.m. and prior to 6 a.m. and/or (5) Refusal to give the franchisor or supplier of financial records of the operation of the franchise which are not related or unnecessary to the franchisee’s obligations under the franchise agreement.
Continue to our section for Start-Up Franchisors
Continue to our section for Established Franchisors

For additional information for start-up and established franchisors we recommend reading:
"The Revised Franchise Formula: A Guide for Franchising Your Business in the New Economy"

]]> http://www.franchiselawsolutions.com/blog/massachusetts%2Dfranchise%2Dbill%2Dproposed%2Dconcerning%2Dfranchise%2Dterminations%2Dwhat%2Ddoes%2Ds%2D1843%2Dmean%2Df%2Ecfm www.franchiselawsolutions.com-78811 Wed, 04 Apr 2012 08:00:00 GMT <![CDATA[Burger Franchise Expands in FL: Burger 21 Signs Initial Franchise Agreements]]> recently signed its first two franchise agreements. These first franchise locations will be opening  in Orlando. Additionally, the company will also be opening two additional corporate owned franchise locations in Tampa, FL.

Burger 21 has been operating its fast-casual restaurant since 2010 and is known for its 21 unique burger creations which are made from ground beef, chicken, turkey, shrimp, and tuna depending on which burger is ordered. Burger 21’s unique name comes from their concept of featuring a new burger and shake combo on the 21st of every month. 

Making the decision to franchise a profitable business is one that must be carefully considered from every angle and should be discussed with a franchise lawyer. Keep in mind that there are many laws concerning franchising many of which vary from state to state. 

Continue reading about How to Franchise your Business
Continue reading about State Franchise Laws


For additional information about franchising your business we recommend reading:
“The Franchise Formula: A Guide for Franchising Your Business in the New Economy”

]]> http://www.franchiselawsolutions.com/blog/burger%2Dfranchise%2Dexpands%2Din%2Dfl%2Dburger%2D21%2Dsigns%2Dinitial%2Dfranchise%2Dagreements%2Ecfm www.franchiselawsolutions.com-78709 Tue, 03 Apr 2012 08:00:00 GMT <![CDATA[Top Franchises: Getting the Most for Your Investment]]> Often people who are interested in entrepreneurship decide to purchase a franchise for the simple fact that it takes some of the guess work out of having a business. Generally, the toughest part about buying a franchise is finding a franchise that fits your interests and, at the same time, has a low failure rate. 


A recent article on Forbes.com revealed the top 10 “franchises for the buck”. According to the article the list was generated based on five variables – average initial investment (franchise fees plus equipment costs, total locations, closure rate (reported the last three fiscal years), growth in the number of U.S. outlets (reported for the last three fiscal years), and number of training hours. While this list serves as a starting point for purchasing a franchise it is always important to make sure due diligence is carried out.

Top 10 Franchises for the Buck recently reported by Forbes:
1)    Snap-on
       Average initial investment: $135,390
       U.S. locations: 3,392 (as of 1/1/11)
       Closures: 0 (last three fiscal years)
       Hours of training: 191
2)   7-Eleven
       Average initial investment: $393,800
       U.S. locations: 6,142 (as of 12/28/10)
       Closures: 90 (last three fiscal years)
       Hours of training: 304
3)   Aaron’s
       Average initial investment: $450,000
       U.S. locations: 1,749 (as of 12/31/10)
       Closures: 12 (last three fiscal years)
       Hours of training: 701
4)   Panera Bread
       Average initial investment: $1,447,770
       U.S. locations: 1,379 (as of 12/28/10)
       Closures: 6 (last three fiscal years)
       Hours of training offered: 1,129
5)   Servpro
       Average initial investment: $156,250
       U.S. locations: 1,571 (as of 12/31/10)
       Closures: 22 (last three fiscal years)
       Hours of training offered: 226
6)   McDonald’s
       Average initial investment: $1,480,625
       U.S. locations: 14,016 (as of 12/31/10)
       Closures: 367 (last three fiscal years)
       Hours of training offered: 840
7)   Liberty Tax Service
       Average initial investment: $63,350
       U.S. locations: 3,592 (as of 4/30/11)
       Closures: 337 (last three fiscal years)
       Hours of training offered: 31
8)   Merry Maids
       Average initial investment: $66,600
       U.S. locations: 943 (as of 12/31/10)
       Closures: 17 (last three fiscal years)
       Hours of training offered: 58.5
9)  The Maids International
       Average initial investment: $959,000
       U.S. locations: 1,053 (as of 9/30/10)
       Closures: 38 (last three fiscal years)
       Hours of training offered: 210
10) Jimmy John’s
       Average initial investment: $395,500
       U.S. locations: 1,130 (as of 12/31/10)
       Closures: 23 (last three fiscal years)
       Hours of training offered: 172

Continue reading about Buying a Franchise

Buying a Franchise? We recommend reading the following:
“An Entrepreneurs Guide to Purchasing a Business or Franchise”

]]> http://www.franchiselawsolutions.com/blog/top%2Dfranchises%2Dgetting%2Dthe%2Dmost%2Dfor%2Dyour%2Dinvestment%2Ecfm www.franchiselawsolutions.com-78721 Tue, 03 Apr 2012 08:00:00 GMT <![CDATA[NY and NJ Shareholder Dispute: Taking Control of Critical Assets]]>
It is beneficial to decide if you will be able to secure these assets early on in a partnership or shareholder dispute. Your ability to secure control over these critical assets will heavily depend on whether or not you control these assets. Depending on whether you are in control of the assets or not will help determine the course of action you should take and should be discussed with your partnership or shareholder lawyer. 

LEARN MORE
To learn more about a proven course of action and plan to protect and defend your interests as a New York or New Jersey partner, shareholder or member, contact Partnership and Shareholder Lawyer, Charles N. Internicola, Esq. at 800.976.4904

THE PARTNERSHIP DISPUTE GUIDE
For a limited time, order a free complimentary
copy of Charles N. Internicola, Esq’s book:
“The New York and New Jersey Partnership Dispute Guide”

ADDITIONAL ARTICLES BY NEW YORK AND NEW JERSEY
PARTNERSHIP LAWYER, CHARLES N. INTERNICOLA:

]]> http://www.franchiselawsolutions.com/blog/ny%2Dand%2Dnj%2Dshareholder%2Ddispute%2Dtaking%2Dcontrol%2Dof%2Dcritical%2Dassets%2Ecfm www.franchiselawsolutions.com-75729 Tue, 21 Feb 2012 08:00:00 GMT <![CDATA[New York and New Jersey Partnership Disputes: The "Other Benefits of an Injunction Hearing"]]> One interesting fact about New York and New Jersey law is that although each state has its own laws with many variations, there are nevertheless overwhelming similarities when it comes to partnership and shareholder disputes.  Yesterday I had the benefit of appearing for two separate hearings - one in New York and one in New Jersey - and both involved an Order to Show Cause and a request for some form of injunctive relief related to a partnership and shareholder dispute.

After both hearings, it was quite apparent for me that in both New York and New Jersey the benefits of filing an Order to Show Cause and seeking an injunction - assuming that you have the right case and follow the right approach - are substantial.  Setting aside the particular outcome and whether or not an injunction is granted, there are numerous "procedural benefits" that you should be aware of.  These benefits include: 


  • Case Acceleration- The filing of an Order to Show Cause (an Order to Show

Cause is the name for an emergency motion filed with a NY or NJ court) will accelerate your entire lawsuit and, more likely than not, serve to efficiently bring about a legal outcome or settlement.  A typical lawsuit - one traditionally started by the filing of a complaint (not an Order to Show Cause) - will take many weeks and months before you even get assigned to a judge.  When an Order to Show Cause is filed, you are granted an immediate hearing before a judge and after that hearing all other aspects of your lawsuit, more likely than not, will be accelerated.

Why will this benefit you?  First because when faced with a serious partnership dispute you may need the immediate intervention of the court to prevent things such as a partner lockout or misappropriation of funds.  Second, because delayed litigation is inefficient and, many times, wasteful.

  •  Evidence Acceleration - When an emergency Order to Show Cause if filed

whereby you seek a court imposed injunction to stop or limit certain actions of your partner - you will be submitting factual affidavits to support your case.  In turn, your partner and his or her attorney will submit their own affidavits in response

Why will this benefit you? Because you will be accelerating the "discover process" and forcing your partner to immediately respond and "lock-in" his or her position.  Your partner will be required to immediately submit an opposing affidavit that he or she will sign.  This affidavit must be prepared quickly and will be filed with the court.  Although you should expect your partner to try to contradict your claims, a benefit arises since your partner must immediately act and make statements.  Once these statements are made they can’t be taken back and at least you will know what issues you must address in the lawsuit.  In a traditional lawsuit - one filed by the filing of a complaint - it may be many months before your partner is required to commit to a position.

LEARN MORE
To learn more about a proven course of action and plan to protect and defend your interests as a New York or New Jersey partner, shareholder or member, contact Partnership and Shareholder Lawyer, Charles N. Internicola, Esq. at
800. 976. 4904

THE PARTNERSHIP DISPUTE GUIDE
For a limited time, order a free complimentary
copy of Charles N. Internicola, Esq’s book:
“The New York and New Jersey Partnership Dispute Guide”


ADDITIONAL ARTICLES
By New York and New Jersey Partnership and Shareholder Lawyer
Charles N. Internicola, Esq.

]]> http://www.franchiselawsolutions.com/blog/new%2Dyork%2Dand%2Dnew%2Djersey%2Dpartnership%2Ddisputes%2Dthe%2Dother%2Dbenefits%2Dof%2Dan%2Dinjunction%2Dhearing%2Ecfm www.franchiselawsolutions.com-75479 Fri, 17 Feb 2012 08:00:00 GMT <![CDATA[New York and New Jersey Shareholder and Partnership Dispute Lawyer Offers Information for the Best Course of Action in a Partnership Dispute]]> What is the Best Course of Action When You Are Faced with a Partner, Shareholder, or Member Dispute?", Mr. Internicola addresses multiple steps that can be taken by a partner, shareholder or member involved in a dispute to "level the playing field".

Some of the steps mentioned in the article that are a "proven course of action"in partnership dispute matters are as follows:
  • Identify the facts concerning the partnership;
  • Identify the legal rights associated with the partnership's interests;
  • Identify your agreement provisions;
  • Identify your interest status - minority, equal, or controlling - and use it to  your advantage;
  • Take control on critical assets - most of the time this will be intangeble assets such as customers;
  • Track the pre and post-dispute actions of your partners;
  • Develop specific goals;
  • Focus on rebalancing the negotiating playing field;
  • Adopt a litigation strategy focused on action and, when possible, pre-emption;
When involved in a partnership dispute it is important to take the appropriate steps of action sooner rather than later. 

LEARN MORE: To learn more about a proven course of action and plan to protect and defend your interests as a New York or New Jersey partner, shareholder or member, contact Partnership and Shareholder Lawyer, Charles N. Internicola, Esq. at 800.976.4904


THE PARTNERSHIP DISPUTE GUIDE
For a limited time, order a free complimentary
copy of Charles N. Internicola, Esq’s book:
“The New York and New Jersey Partnership Dispute Guide”



ADDITIONAL ARTICLES BY NEW YORK AND NEW JERSEY PARTNERSHIP LAWYER, CHARLES N. INTERNICOLA:
Partnership Disputes: Important Factors to Discuss with Your Lawyer
Partnership Disputes: What Are They Really About?
Partnership Disputes: Initial Factors to Consider
The Significance of Preserving Your Business Assets and Operations when Faced with a Shareholder or Partnership Dispute
]]> http://www.franchiselawsolutions.com/blog/new%2Dyork%2Dand%2Dnew%2Djersey%2Dshareholder%2Dand%2Dpartnership%2Ddispute%2Dlawyer%2Doffers%2Dinformation%2Dfor%2Dthe%2Dbe%2Ecfm www.franchiselawsolutions.com-75316 Wed, 15 Feb 2012 08:00:00 GMT <![CDATA[Improvement of Franchise System Proves Effective for Houston Pizza Franchise]]> I am a big fan of articles and information focused on franchisors focused on “improving their existing franchise and business systems”. 

In "Russo's New York Pizza Ready for Expansion", Pizza Market Place: Deep Industry Insights, it discusses some of the steps that the franchisor of Russo New York’s Pizzeria and Russo Coal-Fired Italian Kitchen (a Houston-based pizzeria and Italian restaurant) has taken to improve sales during a tough economic climate.


In the article, Anthony Russo, an officer of the Franchisor, acknowledges the negative economic climate but does emphasize “Russo’s” focus on is implementing strategies “to ensure continued success for existing restaurants and future franchisees”.  One strategy that is discussed is the introduction of a new menu.


Unfortunately, the article does not address or discuss other strategies that Russo’s may or may not be implementing.  Certainly – for a restaurant – the constant improvement of a menu and other offerings are critical.  However, I would be extremely curious to see what other systems that Russo’s may or may not be considering.  For example, is the new menu designed to solidify Russo’s existing customer base or are they looking to expand their market?  Also are there systems that may or may not be implemented to improve franchisee profitability and reduce costs.


I certainly would be interested to learn more.  However, I could never criticize a franchisor that is at least aware of the importance of improving franchise systems.  


For information on Improving Your Franchise we recommend reading:
“The Franchise Formula: A Guide for Franchising Your Business in the New Economy”


If you are a franchisor, what steps are you taking to improve your business systems and the profitability of your franchisees?  If you are considering “franchising your business” what “system advantages” will your franchisees benefit from?  These are certainly important questions – especially in the current economic climate.


Continue reading about Improving Your Franchise Practices

]]> http://www.franchiselawsolutions.com/blog/improvement%2Dof%2Dfranchise%2Dsystem%2Dproves%2Deffective%2Dfor%2Dhouston%2Dpizza%2Dfranchise%2Ecfm www.franchiselawsolutions.com-73303 Wed, 18 Jan 2012 08:00:00 GMT <![CDATA[Partnership Disputes: Protection for Oppressed Minority Shareholders]]> Minority Shareholder Rights: Protection from Oppression
Many times when I am contacted and consulted by a minority shareholder, partner or member (someone who controls less than 50% equity interest) for advice and a plan for dealing with a lock-out or a majority intent on squeezing the value of out of the minority, is a genuine concern about either a onerous shareholder agreement (one where the majority controls) or the simple fact that he or she, as a minority shareholder, may be "out voted".  Basically, minority shareholders are concerned that their non-controlling interest or onerous shareholder agreement will, effectively, render their equity interest worthless.

While the concern that I have described exists for good reason, minority shareholders need to know, beware of and discuss with his or her shareholder attorney, the "fiduciary rights and obligations that are due to minority shareholders and how these rights may be used to fight off oppressive acts. Here are some factors to consider:

  • Acts of Oppression - Acts of oppression come in many forms and are, generally, (i) actions taken by the majority or controlling shareholders that, (ii) appear to be legal or, at least, consistent with the technical terms of the shareholder agreement / law but (iii) in actuality, are actions that are taken to simply, deny minority shareholders the rights and value associated with their shares.  Examples include the diversion of funds through alternate forms of compensation to the majority and refusing to issue distributions.
  • How Minority Shareholders Must Fight Back the Majority -  There are many courses of action that a minority shareholder may adopt but the one that is the topic of this article relates to the fiduciary duties and obligations that exist between all shareholders.  That is, under New York law the courts impose on all shareholders, partners and members a fiduciary duty.  This fiduciary duty requires that with regard to the corporate entity the shareholders / partners act in good faith and to deal fairly with one another.  With regard to minority shareholders this fiduciary duty requires that the majority not engage in oppressive actions.  That is, the majority must act in good faith and not for the purpose of harming the minority - even if the majority's actions appear to be technically permitted by a shareholder agreement or otherwise.
This is a significant issue one that is critically important to minority / non-controlling shareholders and partners.  If you are faced with a situation where the majority / controlling partners are acting for the purpose of forcing a buy-out or nullifying your interests, understand that you may posses many more rights than those stated in your agreement.  Understand that your partners owe you a fiduciary duty and if you are faced with litigation you very may well possess significant claims for legal relief.

For information about the rights of minority shareholders and partners and how Shareholder Lawyer Charles N. Internicola, Esq. assists minority shareholders, call Mr. Internicola and his staff at 800.976.4904 
]]> http://www.franchiselawsolutions.com/blog/partnership%2Ddisputes%2Dprotection%2Dfor%2Doppressed%2Dminority%2Dshareholders%2Ecfm www.franchiselawsolutions.com-72841 Tue, 10 Jan 2012 08:00:00 GMT <![CDATA[Why You Must Look at Your Shareholder agreement Differently when Faced with A Shareholder or Partner Dispute]]>
There are many shareholder or operating agreement clauses that may be relevant to your dispute, such as,
  •  Provisions pertaining to non-competition;
  •  provisions pertaining to dissolution or wind-down;
  •  provisions pertaining to a triggered buyout of one partner or shareholder; and 
  •  provisions pertaining to valuation.
Although this may sound counter intuitive but even if you want to trigger a dissolution, partner buyout or business valuation, sometimes, it is best to avoid directly pursuing this rights under your shareholder or member agreement.  

Why? Because many times there are unintended consequences and based on the traditional structure of the more common New York and New Jersey partnership agreements, triggering these events may reduce your negotiating leverage.  For example, rather than having your partner account for a breach of his or her obligations to your business, your partner may now "sit back" with his or her attorney and simply demand payout based upon a buyout event that you triggered.  So always be cautious and clearly plan out your strategy with your lawyer before you start invoking remedies contained in your shareholder or membership agreement.  Always be cautious about triggering a dissolution or buyout.


To Learn More about Business or Partnership Disputes, Contact Partnership Lawyer Charles N. Internicola at 800. 976. 4904
]]> http://www.franchiselawsolutions.com/blog/why%2Dyou%2Dmust%2Dlook%2Dat%2Dyour%2Dshareholder%2Dagreement%2Ddifferently%2Dwhen%2Dfaced%2Dwith%2Da%2Dshareholder%2Dor%2Dpar%2Ecfm www.franchiselawsolutions.com-72287 Fri, 30 Dec 2011 08:00:00 GMT <![CDATA[Worst and Best Fitness Franchises to Buy: 2011 SBA Loan Default Rates]]> When evaluating a prospective investment and purchase of a franchise one of the many due diligence factors that should be evaluated includes SBA loan default rates. A high SBA loan default rate should be viewed as a serious warning sign.

For information on buying a franchise we recommend reading
“An Entrepreneurs Guide to Purchasing a Business or Franchise”

Below is a list of the best and worst fitness franchises “based upon” the 2011 SBA loan default rates. Franchises are listed from highest to lowest failure percentages (please keep in mind not all fitness franchisees are listed).

Franchise Brand                                               Failure %            
Shapexpress                                                      66.67%
Velocity Sports Performance                             57.89%
My Gym                                                             53.00%
World Gym & Fitness Center                            28.57%
Fitness Together                                               28.00%
Curves for Women                                            22.00%
Fitness for Life Franchise Corp                         21.05%
Gold’s Gym                                                        19.00%
Little Gym                                                          17.00%
Snap Fitness                                                      12.00%
Jazzercise                                                          10.00%
Anytime Fitness                                                   8.00% 
Planet Fitness                                                      0.00%

While a high default rate is a definite warning sign keep in mind that a low default rate (by itself) should not be relied upon as a basis for your franchise investment. Consider that a low rate may be attributed to the fact that the franchise is new or that the franchisees do not utilize or qualify for SBA loans.

Continue reading about Buying a Franchise

]]> http://www.franchiselawsolutions.com/blog/worst%2Dand%2Dbest%2Dfitness%2Dfranchises%2Dto%2Dbuy%2D2011%2Dsba%2Dloan%2Ddefault%2Drates%2Ecfm www.franchiselawsolutions.com-71720 Tue, 20 Dec 2011 08:00:00 GMT