Franchise King Shares Top Franchise Trends and Predictions for 2018

For this week’s franchise post I thought I would share an interesting article from Joel Libava a/k/a “The Franchise King”. Joel recently wrote his Top Franchise Trends and Predictions for 2018. It is really an insightful look at the industry and a good read for franchisors and prospective franchisees alike.

One of the more interesting subjects in the article to me relates to Subway. Joel talks about how Subway has been having big issues. Yes, even established (correction: even the most established) of franchises have issues. Everyone is better off knowing that fact!

If you are interested Joel’s franchising blog is one to follow.

Starting a Franchise Company? Have Systems and Investment Capital in Place

I have received a number of calls recently about starting a franchise operation. On the one hand, it is awesome because the interest in franchising among Iowa business owners definitely seems to be growing. But on the other hand, most of these business owners are not ready to begin the leap into franchising just yet.

A lot of times a prospective franchisor might be getting a lot of encouragement from customers saying, “you should franchise!” While that’s wonderful often the prospective franchisor is operating only a single location, does not have adequate systems in place, and perhaps most importantly, lacks the investment capital to really make a franchise work.

The backbone of any successful franchise company is systems. You will need to create and completely document the systems that a franchisee will use to run their business successfully. You will need to create a training program that will teach a new franchisee what they need to know to become successful. You will also need to develop marketing plans that a new franchisee will use to obtain customers. And since you will now be in the “business of franchising” as opposed to your “former business”, you will also need to have systems that you can use to recruit new franchisees into your franchise company. There is a TON of work to do. You may be able to hire outside consultants to assist with all this work, but if you do, you are definitely going to pay significant dollars for that assistance.

Which brings me to the next point. You need considerable capital to get a franchise system off the ground. You will need to have a franchise disclosure document and franchise agreement written hopefully by an experienced franchise attorney. You will also need audited financial statements produced by an experienced accountant. You will need an operations manual that sets out your systems for a franchisee to run their business. All of this takes a significant investment on your part, and not only in terms of money,  but also time.

It takes lots of time, effort and money to get a franchise off the ground. There are a great deal of other factors that I have not even mentioned in this blog post. It is just the tip of the iceberg. It is not something to take lightly. It can be a great model for business but it is usually for the business owner who already has experience in managing multiple locations with great systems in place and significant investment capital at their disposal.

Sexual Harassment Claims will Continue to Climb in 2018

2017 was a watershed year for the publicity of sexual harassment claims. Time Magazine even named its “Person of the Year” as the Silence Breakers. Business owners should expect those claims to become even more prominent in 2018 as the masses, not just celebrities, begin to break their silence as well. Just yesterday, I saw a headline about a sexual harassment case locally involving two female teenagers that decided to come forward. In years past, I would say most teenagers would have feared bringing a sexual harassment claim. But this trend is here to stay and that’s undoubtedly a good thing overall for our workplaces.

Employers have an obligation to prevent sexual and other forms of harassment in the workplace.  At times employees will screw up but an employer must be prepared.  Some ways to avoid harassment claims include the following:

  • Have a written policy against harassment which should include an anti-retaliation provision for those employees who report harassment.
  • Provide and communicate in writing multiple channels for your complaint procedure. Employees should be able to report harassment to more than one person within the company.  The complaint process should be clearly defined in your employment manual.
  • Make sure you train supervisors each year and require supervisors to report harassing conduct.
  • Once notified of harassing conduct – take immediate action to investigate fully.
  • Do not retaliate against employees that make a complaint.
  • Discipline or terminate the offender as appropriate.

Also on this subject I saw an informative post from Marvin Kirsner of Greenberg Traurig that sexual harassment settlements with nondisclosure agreements will not be deductible under the new tax law. This  is definitely something to keep in mind when settling such lawsuits. Of note, attorneys’ fees will also not be deductible if nondisclosure agreements are used in the settlement.

 

 

Protect Your Confidential Business Information

I often see cases involving the theft of confidential business information by former employees. Attorney Eric Roth has some helpful tips in a recent blog post on how to deal with the problem.

The main take away reminder in my opinion is to take action to protect your trade secrets BEFORE it becomes a problem. As an example, develop confidential information policies in your business to take steps to protect your information including restrictive covenants and send a reminder letter to departing employees of their obligations not to use the confidential business information or violate any non-compete agreements. Conducting a review of a departing employees’ emails is an excellent place to start in order to find out whether confidential information is being downloaded or taken by the employee. Another good idea is to have an exit interview with employees where they return all materials and where you discuss the continuing obligations to your business despite the end of the employee relationship.

Protecting your confidential business information is critical for most employers. Take steps to protect that information now before it is too late.

Roles of Shareholders, Directors and Officers in Closely Held Businesses

I came across this blog post from the Family Business Advocates Blog and thought it was worth sharing. The post describes the various roles of shareholders, directors and officers in closely held family businesses. It’s good information on a topic that is often misunderstood by small business owners.

Read the post here.

Iowa Governor Branstad to Cut $7.7 Million from Judiciary Budget

Governor Branstad announced his proposed budget yesterday with $110 million in cuts. This includes $7.7 million in budget cuts for the judiciary.

The budget cuts in the judiciary are alarming. Today, Chief Justice Mark Cady will give his state of the judiciary address. It will be interesting to hear his comments based upon the fact that past cuts have already thinned out resources for our judicial branch.

I’ll be frank. I did not know there was $7.7 million left to cut from our judicial branch based upon past cuts. Iowans need access to judiciary services and the governor’s proposed budget threatens access to justice for our citizens. This will be a challenge for our judiciary to say the least.

Best Lawyers in America® Recognition for Brick Gentry Lawyers

Several Brick Gentry lawyers were recently recognized by Best Lawyers in America® for 2016-2017.

See the full article here.

Rush Nigut was named one of the Best Lawyers in America® in three categories including:

  • Business Organizations (including LLCs and Partnerships) (Firm receiving a Tier I rating);
  • Closely Held Companies and Family Business Law
  • Franchise Law (Firm receiving a Tier I rating).

Best Lawyers® is the oldest and most respected peer-review publication in the legal profession. Since the first published edition in 1983, it has grown to be widely recognized by clients and legal professionals alike as a significant honor and the most reliable source of legal referrals. The 23rd Edition covers all 50 states and the District of Columbia, and inclusion is based on more than 7.3 million detailed evaluations of lawyers by other lawyers.

Square One DSM Startup Stories to Feature iEmergent

Laird Hedlund Nossuli, CEO, and Bernard Nossuli, COO will join Mike Colwell for the September edition of Square One DSM Startup Stories to share the tale of a vision conceived and brought to life by company founder and Laird’s late father Dennis Hedlund.

I have had the good fortune of working with this company and its executives. Their story is good one.

Here is an excerpt from the Square One DSM press release:

A fairly circuitous path led to the creation of iEmergent and its cloud based tool, Mortgage Market Smart. Dennis Hedlund, after many years as an executive in telecommunications and mortgage companies, saw an opportunity to apply the forecasting methods he had developed for large call centers to quantifying future market opportunities for mortgage lenders. Taking the entrepreneurial leap, he left Wells Fargo and began studying decades of data from a wide variety of public and private sources. He identified unique patterns that would ultimately lead to the development of the iEmergent forecasting model…

Diversifying over the years through product development and service offerings, they have penetrated not only the large national businesses and regional lenders but are now targeting the smaller community institutions with data, products and resources that are tailored to each institution’s size and complexity…

Laird, along with her sister and mother initially joined her father in his pursuit of growing the company. Although both sisters would step away for a while to continue their educations, circumstances called Laird to take the helm as CEO, with the illness and untimely passing of her father. “I had to take the reins in a way I was not at all prepared to do,” confesses this Swarthmore graduate in Religion, who also holds a Masters in Social Work. As she reflected on those challenging times, Laird states “you just keep moving forward, staying true to your goals and your visions,” foreshadowing some of the insights she can share with the Startup Stories audience…

Laird’s husband Bernard came on board as COO at the time of her father’s illness, taking his own entrepreneurial leap leaving a position at DuPont, to help the company continue. “While it is something of a double edged sword, being small and nimble has served us well,” he adds, anxious to share the value they have found in augmenting their in-house skills as needed through outsourcing, consulting and contracting.

Details on the event:

$15 admission fee (includes lunch) or free (if you don’t want lunch).

11: 30 a.m.
September 21st 2016
Greater Des Moines Partnership

700 Locust Street, Suite 100

Conference Center (street level)

Purchase your tickets/make reservations – http://members.desmoinesmetro.com/events/details/september-startup-stories-53786

Contact at info@squareonedsm.com for more information.

Coaches Beware! Lawsuits to Become New Norm?

It was reported that Iowa State women’s basketball coach Bill Fennelly and ISU have been sued by former player Nikki Moody. Fennelly is known as a “passionate” and “demanding” coach. In other words, he isn’t afraid to “get after” players in order to motivate them. Moody obviously took exception to his techniques and has alleged the coach caused a “hostile” work environment because of “racial harassment.” Moody alleges that Fennelly treated black women and other minorities differently than white players because of their race. Much of the complaint focuses on the fact that Fennelly allegedly referred to Moody (and another black player) as “thugs.” Many former players in particular have spoken out in support of Fennelly.

The lawsuit should be a wake up call for all coaches. Many coaches are considered “passionate” and “demanding” by players and parents. Often these coaches may use “colorful” language when talking with their players. Some players may be able to handle it and others may not. Some players may be more of a target than others in practice and games for various reasons, whether it relates to performance, attention span, hustle, desire, respectfulness or dozens of other reasons. And sometimes coaches may simply go too far in the manner with their passionate and demanding approach.

Does that mean coaches need to be soft on players? I don’t think so. Coaches can still demand much of their players. But coaches also need to be aware of what they say and how they say it. Cursing by coaches has long been generally accepted (particularly at the college and pro levels), but it is a bad idea. So is calling your players derogatory names and making threats to them (whether it relates to playing time, expulsion from the team or other issues). I am not saying Bill Fennelly engaged in that type of behavior. I don’t know the facts. But I have been around the fields and courts enough to know that coaches engage in that sort of behavior frequently. Coaches get upset and emotional. It happens. But insulting and berating players shouldn’t be accepted and all too often that is what happens.

Lawsuits like Moody’s are not new. The University of Illinois was also sued this past year for allegedly creating a racially hostile environment. The players initially demanded $10 million but eventually settle the case for $375,000. An assistant coach was fired as a result. Many coaches will need to adjust their behavior or else they will become targets. I also expect these lawsuits to continue to trickle down from the college and high school ranks down into AAU and other youth related programs. (Programs better make sure their insurance covers them for these sorts of lawsuits). In the end, the Moody v. ISU case will likely resolve itself with a settlement short of trial. It seems too risky for a collegiate coach to have their dirty laundry aired in a public setting. It would be horrible for recruiting. And that’s exactly why these cases will become the new norm.

Read the entire Moody petition here.

Important Reminder: Review Your Estate Plan

There is a really good article in the Des Moines Register today written by Frank Mokosak discussing how a periodic review of your estate plan will alert you to any necessary changes. It seems to come in waves in my legal practice but recently I have had a number of clients need to change their Wills and estate planning documents for one reason or another.

According to the article, events leading to a review include:

  • Change in your marital status
  • Addition to your family through birth, adoption or marriage (stepchildren)
  • Death or incapacitation of spouse or family member
  • Spouse, parents or other family member has become dependent on you
  • Substantial change in the value of your assets or your plans for their use
  • Receipt of a sizable inheritance or gift
  • Change in income level or income requirements
  • Retirement
  • You have plans to change any part of your estate plan

The article also discusses some specific provisions to review including, but not limited to:

  • Who are your family members and friends? How do you feel about them?
  • Do you have a valid will? Does it reflect your current goals and wishes? Does your choice of an executor or a guardian for your minor children remain appropriate?
  • In the event you become incapacitated, do you have a living will, durable power of attorney for health care or Do Not Resuscitate order to manage medical decisions?
  • What property do you own and how is it titled?
  • Have you reviewed your beneficiary designations for your retirement plans and life insurance policies?
  • Do you have any trusts, living or testamentary?
  • Do you plan to make any lifetime gifts to family members or friends?
  • Do you have plans for charitable gifts or bequests?
  • If you own or co-own a business, have provisions been made to transfer your business interest? Is there a buy-sell agreement with adequate funding? Would lifetime gifts be appropriate?
  • Do you own sufficient life insurance to meet your needs at death?
  • Have you considered the impact of gift, estate, generation-skipping and income taxes, both federal and state?

We have all seen circumstances where the unexpected has occurred. It’s just a super idea to take a look at your Will and estate planning documents periodically, preferably annually. If changes need to be made, don’t sit on it. Usually people think most about their estate documents around the holidays when family is together. But for some reason it’s human nature to put off the completion of documents even after engaging a lawyer to draft them. And get comfortable with the idea of discussing your estate. It is understandable that people do not want to talk about issues surrounding death but as one person I met recently pointed out in a somewhat joking, but truthful way, “Ain’t none of us getting out of this alive.”

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