Join me for a webinar this coming Wednesday, February 15, 2012 through MyEntreNet entitled Social Media: From Hiring to Firing. We will discuss strategies to manage social media in the workplace including discussion of recent cases, the NLRB report on social media and discussion of social media policies.

Here’s some interesting stats on social media and why it’s so important to your business. Did you know that more iPhones sold in a given day than the number of people born in the world? 

In this video I discuss a red flag I’ve seen come up in franchise agreement negotiation. Sometimes a franchisor will tell a prospective franchisee that they can’t (or won’t) change the franchise agreement. That’s just fine but my problem comes when they say, "Don’t worry though, we won’t hold you to that provision." That is definitely a red flag!

 

Maryland franchise lawyer Jeff Fabian has an excellent blog post on the issues to consider when the franchise agreement terminates on the Franchise Help blog.

In my experience many franchisees are under the misconception that they can simply change the name of their business and then begin serving the same customers the next day under the new business name. Wrong!

Most franchise agreements will contain a non-compete clause. And franchisees are surprised to learn that the customers may not belong to them at all.

Jeff’s post covers these issues and more. Keep these factors in mind when you are initially reviewing the franchise agreement and considering whether to purchase the franchise. If a franchise term is 5 years, that can go very fast and you might find your bucket is empty at the end of the term.  

A false advertising lawsuit has been filed against Brett Bros. Sports International, Inc. by an Iowa man. The President of the company is none other than Hall of Famer and legendary baseball player, George Brett. The lawsuit, filed in the United States District Court for the Southern District of Iowa seeks class action status and more than $5 million in damages according to the Complaint filed on February 6, 2012.

The allegations center on the alleged health and/or performance benefits of the necklaces that many young athletes seem to wear these days. The lawsuit alleges that Brett Bros. falsely claims its necklaces "help relieve stiffness in the shoulders and neck, eventually stabilizing your whole body, as well as help recovery from sports fatigue, restore important ion balance, and improve concentration and focus."

The Plaintiff, who purchased his necklace at the 2011 College World Series, says he didn’t receive any of these benefits after relying upon the endorsement of George Brett.

This isn’t the first time the sports performance necklace and bracelet industry has come under attack. Last year, it was reported that Power Balance entered into a $57 million settlement and declared bankruptcy.

The lawsuit against Brett’s company specifically alleges that the company violated the Iowa "Private Right of Action for Consumer Frauds Act" (Iowa Code section 714H).  Filing a class action pursuant to the statute requires approval from the Iowa attorney general’s office. The Complaint indicates that such approval has been obtained. A successful lawsuit under the statute would entitle the named Plantiff and the class members to damages, costs and reasonable attorney’s fees.

One of the nice benefits of filing an LLC in Iowa is that the owners are not required to disclose the members in filings with the Iowa Secretary of State. In many instances when filing a Certificate of Organization, I won’t list the member(s) to provide anonymity to the member(s) on the public search site. Instead, I’ll sign as the organizer and use our law office address as the registered office for the company. In biennial report filings, I’ll sign as the registered agent or authorized representative.

This strategy is helpful when business owners don’t want others to know what their doing through public searches on the Secretary of State’s site. Today’s Des Moines Register BIZ BUZZ column had a report about a buyer that purchased a home in our area for $2.5 million. The owner obviously did not want others to know who purchased the home so they set up an LLC with only the lawyer disclosed as the organizer. This kept the information confidential – for now. Someone will likely found out when they move in since it’s a residential property. But I’ve represented several people who use this strategy to keep their identities protected from public searches. The member is disclosed in the operating agreement, meeting minutes and other documents but those documents are not filed or shared on the Iowa Secretary of State site.

Just another reason why forming an LLC in Iowa is beneficial for Iowa residents.

 

I am often asked whether a business person should include their spouse when forming an Iowa small business LLC. Circumstances may vary but there are usually some benefits to filing an LLC as a single-member rather than having two or more members. First, single-member LLC owners are not required to file a separate tax return for their business. Additionally, it may help your family from an asset protection standpoint. I discuss these issues in the video below.

I’ve addressed the issue of where to incorporate or form an LLC for your Iowa small business a few times on the blog. In general, Iowa small businesses would do well to incorporate or form their LLCs right here in Iowa.  But I am asked often enough that I thought it might be helpful to prepare a video on the topic.

I recently received an inquiry on the blog asking whether or not a spouse should sign a franchise agreement. Circumstances may vary, but in general, I usually recommend that spouses don’t sign the franchise agreement if they aren’t going to be involved in the franchise business. It’s my view there is no reason your family should throw all your eggs in one basket by having both spouses sign a personal guarantee.

If a franchisor tells you it’s required for the spouse to sign, push back. There is no such legal requirement. Plus, most franchise agreements have transfer provisions that allow the franchise to be transferred to the spouse in the event of death or other circumstances.

Other reading:  11 Things Every Franchisee Should Know.

Be sure to consult a franchise and/or business attorney for your specific circumstances.

 

I am pleased to announce that I now have a Rush on Business You Tube Channel where I’ll post short videos on various aspects of business and franchise law. I have a few videos posted so far and I’ll add content weekly.

New videos include:

Should You Include Your Spouse When Forming a Small Business LLC?

Where Should Iowa Residents Incorporate or Form an LLC for their Small Business?

If there is a topic you think would be interesting, please let me know!