In this morning’s paper I noticed that Dear Abby a/k/a Jeanne Phillips dispensed a little advice concerning the sexual harassment of "Millie". 

While I didn’t have major problems with the advice in the column ("Dear Abby" thinks Millie should report the inappropriate behavior by one of the firm’s clients to her boss), I wondered why "Dear Abby" wouldn’t also mention that "Millie" should consult the advice of an employment lawyer.  Perhaps an employment lawyer would inform Millie about the need to follow the steps outlined in any employment handbook when reporting the harassment and her rights and responsibilities in the event that the employer does nothing to investigate or stop the harassment.  This includes the fact that Millie may need to file a civil rights claim if she intends to pursue any legal action. 

Just a thought but I always think it is important to get information and advice from someone that actually might be able to help you.  Many lawyers will provide a free consultation or work on a contingency in plaintiff’s cases, so you shouldn’t be afraid to seek the advice of a lawyer when the situation calls for it.

 

 

Washington employment lawyer Donald Heyrich details some recent huge verdicts against employers.  The verdicts in his report range all the way up to a whopping $47 million.

Looking to avoid big verdicts?  I say treat employees with RESPECT and keep in mind the Golden Rule of Employee Relations:  Fairness.  Unfortunately too many employers forget these basic rules.

It is critical to remember that in a jury trial your jurors are likely to be employees rather than employers.  Being fair will not only reduce the employment claims against you but increase your chances of success if you are sued.

photo on flickr by benleto

 

These posts demonstrate some good business basics:

Small Biz Survival has a good blog post on how to keep good tax records. 

Kyle Kruidenier of the Iowa Law Blog talks about the importance of thinking with the end in mind when forming a business.

Marc Ward shares why LLC operating agreements should be in writing.

Employment law guru Mark Toth has some very helpful "cheat sheets" covering the Family Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA).

Mark says there are more cheat sheets to come.  Also, you would be smart to attend his free Webinar on July 30th for Every Employment Law in 60 Minutes or Less.

 

Nothing like a good article on franchising to bring me out of a blogging hiatus that I anticipated would last at least another week.  But thanks to the Small Business Trends site and franchise consultant Joel Libava, my rest is over.

The Franchise King posted on a Central Ohio restaurant franchise called Roosters that seeks experienced franchise operators rather than newbies that might not understand the industry.  Like Joel, I agree it’s a good concept for a franchisor to target franchisees that have experience in the industry.  Experienced operators are much more likely to be successful.  We agree on that.  We actually couldn’t agree more on that.

However, Joel doesn’t carry that logic forward when it comes to working in a franchise before buying one.  Joel says he is often asked this common question:

“Joel, are there any franchise companies out there that will let me work with a local franchisee, to see if I like the business?” 

And being the laid back guy he is (now don’t get me wrong, Joel is a well-intentioned guy who wrote a book on Franchise Research Steps), Joel responds with an emphatic "No!"  He doesn’t recommend it because the franchisee won’t get the full story.  After all, they don’t have any "skin in the game, so how could they possibly understand what the franchise business owner is going through?  He more or less says that if you aren’t willing to go "all in" from the outset perhaps you should take it as a sign that you shouldn’t go into business for yourself.  (Unfortunately too few people will heed this advice in my experience and take it as a personal challenge to go forward).

So it’s my view working in a franchise business BEFORE buying doesn’t make you a chicken!  In fact, it may be the best due diligence any prospective franchisee could do.  It’s the same reason why so many successful business owners were once employees of the business they ended up buying.  It’s the same reason a successful franchise owner I know worked in retail for a year before buying a retail franchise.  She wanted the experience.  No, she NEEDED the experience before investing much of her life savings.    

Now, it’s true that some prospective franchisees might not benefit from the experience.  Some prospective franchisees have no business ever owning a franchise or any other kind of business.  But to say all prospective franchisees shouldn’t avail themselves of the opportunity to work in a franchise system seems a bit bold in my opinion.  As a franchisee and reader of this blog pointed out:

The most difficult information to obtain and verify is franchisee profitability.  The profitability of the franchisor and the franchisees is not always related.  Sometimes those selling franchises make money while the franchisees do not.  And it is not always due to lack of due diligence on the part of the franchisee.  It may be because of inaccurate information supplied by the seller or franchise support that was promised but never delivered.

Risk is inherent in any business venture.  You are taking a chance and a leap of faith.  But actually working in a franchise business before you buy may allow you to find out whether you want to stake your life savings on the opportunity.  Taking a chance with maximum information is not random chance but a calculated risk – and that could make all the difference.

photo on flickr by ™bluhousworker and original photo by TedSher

 

The Register’s Annual Great Bicycle Ride Across Iowa (RAGBRAI) begins today.  Earlier this year my RAGBRAI inspired Blawg Review #147 received kind comments from my fellow legal bloggers and it was a little deviation from the typical posts you see on this site.

I am still taking a little break but new posts will return soon.  Also be sure to check out the new and improved Iowa Biz site which is now sponsored by the Des Moines Business Record.  I’ll post twice on month for the Iowa Biz site.  My next post on Iowa Biz appears Friday.

This blogger is taking a break.  New posts will return soon.  In the meantime, thought some might like a recap of the most popular posts over the recent past:

Hope to get the Rush on Business Legal Wire, an interactive learning environment, up and running during August.  Stay tuned for more details. 

photo on flickr by wtlphotos.

Des Moines CPA Joe Kristan provides an important lesson on his Roth & Co. Tax Updates Blog in a post entitled, "It’s Your Company.  Is it Your Deduction?"

Joe recounts the story of an entrepreneur who incorporated a business but then spent over $47,000 in business expense out of his own pocket, which he then deducted on his schedule C.  When the IRS called him on it  the tax court told him that only the corporation can deduct corporate expenses.  If the shareholder pays them and isn’t reimbursed, the expenses are treated as a contribution to capital.  That increases the shareholder’s basis, but that doesn’t help the shareholder’s tax picture until the company is sold.  That’s true both for C corporations and S corporations.

Joe offers this lesson:

Mr. Meyer could have submitted his receipts to the company for reimbursement; the company would have been able to deduct the expenses.  Or he could have had the corporation pay the expenses directly.  But by paying the expenses out of his own checkbook and not turning them in for reimbursement, he lost his deductions altogether.

Another problem I see is the entrepreneur who wants to run all his business AND personal expenses through the business.  For example, earlier this spring I witnessed a father buying his son’s baseball equipment at a local sporting goods store.  I chuckled when he pulled out a company check to pay for the equipment.  Sure, one expense might get buried and never noticed in an audit but experience tells me that "pigs get fat while hogs get slaughtered."  Many business people don’t understand where to draw the line.  Business expenses are fine to deduct.  But  running obvious personal expenses through the business just isn’t acceptable.  It could even be a reason to "pierce the corporate veil" in litigation causing you to lose your limited liability protection.  

 

Liz Overton recently discussed the latest blow suffered by Wal-Mart on wage and hour claims over on the Iowa Law Blog.

I predict It’s only a matter of time before wage and hour class action claims impact more mid-sized and smaller companies.  It’s the one area where plaintiff’s attorneys are experiencing success.   

Read also my previous post on how to avoid wage and hour lawsuits including some great comments from top notch attorneys like Dan Schwartz, Anthony Zaller and Bill Grell.