This past week I had the opportunity to attend the ABA’s Forum on Franchising.  What a great event!  First and foremost, it was an opportunity to network with some of the best franchise lawyers in America.   Second, I really enjoyed hanging out with fellow Iowa franchise lawyers, Matt Krigbaum of Cedar Rapids and David Bright of Iowa City.  These guys are excellent lawyers and terrific individuals.  If you are Eastern Iowa I recommend you talk with them regarding your franchising questions.

The initial seminar session I attended was the Fundamentals on Franchising.  Some top-notch franchise lawyers spoke during this 4 1/2 hour session but of particular interest to me was the talk by Ron Gardner of the Dady and Garner Law Firm in Minneapolis.   The law firm is regarded as one of the best firms in the country representing franchisees in disputes with franchisors.  In my franchise law work I counsel and negotiate on behalf of franchisees so the talk was very informative.

Some highlights of Gardner’s talk:

  1. If a franchisor is making certain promises you should attempt to have those promises included in the franchise agreement.  Often a franchisor will say certain things to entice a franchisee to enter into the franchise agreement.  But when you read the agreement these promises are no where to be found.  Get those promises in writing.  If not, you should have no expectation the franchisor will follow through on its promises.
  2. Franchisees and their lawyers must communicate together on much more than just the franchise disclosure document or the franchise agreement.  In order to advise you properly it is important to know your background, your needs and your expectations.  Without this information it is often difficult to know what it important for you in a negotiation and what is not. 
  3. Run Away from Franchisors that Won’t Negotiate.  Some franchisors will tell you that they won’t negotiate their agreements, or worse, tell you the laws and regulations do not allow them to negotiate their agreements.  Tell them to take a long walk off a short dock!  Ask youself whether you want to be in business with a franchisor that will not consider your busines goals and needs.  Fortunately, my experience has been that many franchisors will negotiate at least certain key terms and conditions.
  4. Key Disclosure Issues.  Key disclosure issues generally include litigation, initial investment, vendor rebates, earnings, outlets and financial statements.  It is important to closely review the information regarding outlets. Carefully study the number of transfers and not just the number of closures.  A high number of transfers may be an indication that franchisees in the system are struggling but bad stores have not been shut down.  As I have preached franchise due diligence must include interviews of franchisees, including those that have left the system, in order to get a full picture of the franchise system.
  5. Be Willing to Walk Away.  I have touched on this before.  This is the paradox of negotiation.  You should not fall in love with the deal.  Prospective franchisees who are willing to walk away usually get much more from those who have decided to sign at all costs. 

More to follow on other aspects of franchising in other posts this week.

 

It took us awhile but Sullivan & Ward’s Iowa Law Blog is now live.  It was designed with the able assistance of LexBlog.  (The same company that designed and maintains this blog).

While Rush on Business tends to focus only on issues impacting Iowa businesses, we are taking a broader approach with the Iowa Law Blog to cover many different aspects of Iowa law.  I know many believe that a law blog (or any blog for that matter) should cover a niche topic.  However, I believe that a broader blog is better than no blog and it is frankly tough for a law firm of our size to have eight different niche blogs.  Besides the New Jersey Law Blog is a prime example of how a state law blog can achieve remarkable blogging success.

The Iowa Law Blog will focus on several legal areas including:

  • Utility law (the core of the law firm’s work for over 70 years);
  • Business Law;
  • Trust and Estates;
  • Trial and Mediation;
  • Employment Law;
  • Regulatory Compliance;
  • Family Law; and
  • Real Estate

Similar to what Stark and Stark has done in New Jersey, we hope to keep businesses and individuals updated on legal and legislative developments in the Hawkeye State.  (Yes, you read that correctly despite the lack of wins and no offense).

We hope you find valuable information on the Iowa Law Blog and look forward to your comments.

The ABA’s Forum on Franchising is this week in Phoenix.  This all-star seminar features intensive programs on the Fundamentals of Franchising and the amended FTC rule in addition to many other terrific programs.

Of particular interest is a talk by Brian Johnson about how to become the fluent, confident communicator you’ve always wanted to be – the always articulate attorney.

Stay tuned for updates on the seminar later this week.

In this month’s ABA Journal there is a story on 50 Ways to Market Your Practice.  I read it once.  Then again.  And just to be sure I read it one more time – this time a little more carefully.

But sure enough blogging was not included in the Top 50 Tips to market your law practice.  Honestly after reading the article I almost felt like Marty McFly in Back to the Future.  Take Tip #46:

46.  Write an e-mail newsletter about your practice area and send it to other lawyers.  Archive the newsletters online.

Sadly, that was the closest that we came to the concept of a blog. 

Now don’t get me wrong, many of the ideas are terrific.  In fact, I follow many of the tips outlined.  But so many of the Top 50 Tips are enhanced by blogging.  For example Tip #5:

5.  Offer to write an article for your local paper on a topic such as why everyone should have a will or questions to ask a contractor.  Make sure the byline includes the name of your firm and, if possible, your e-mail address. 

Sure, that might work.  But since I started blogging the media has actually reached out to me and begun to quote my material or asked me to provide quotes for their articles.  I know other blogging lawyers have had the same experiences.  It is amazing how blogging can enable you to take incredible leaps and become recognized as an expert with local AND national media.

Now blogging is probably not for every lawyer.  It takes time and commitment.  But I have found nothing – including all of the Top 50 Tips published in the ABA article – that has made a bigger impact on my ability to generate new business.  Let’s add blogging as Tip #51.  What do you say?

 Photo on flickr by genesis3000.

The Central Iowa Blogga Nostra gathers this Friday morning (Oct. 5) at the Panera on University in West Des Moines.  I encourage you to come join us.  What a diverse and interesting group!  It is absolutely amazing how this group has supported one another.  Collectively we have achieved much more than we could have on our own.  We have marketers, blog coaches, consultants, small business owners, financial gurus, accountants, tech geeks, growth capitalists, executive coaches and  . . . even lawyers. 

Some of my favorite posts over the past week from fellow Central Iowa Bloggers:

Taking Responsibility by Michael Libbie of Insight Advertising.  Michael follows-up on my blog post about the disclosure of anonymous bloggers.  Michael is a big believer that responsible blogging means you should not be able to hide behind your anonymity and say any darn thing you want.

Now THIS is an Elevator Speech by Timothy Johnson of Carpe Factum.  Too funny!

Lessons Learned from a Game of Tag by Central Iowa Financial Planner Art Dinken of Moment on Money.  As Art says,

An experienced professional, in any field, is not just someone who knows what to do. Equally important are the lessons they have learned from past experiences which have taught them when NOT to do.

Also, congratulations to Tom Green and Amy Hunold-VanGundy on the launch of their Runners Lounge Web site.  This running community site is pretty cool and already has a great following thanks to their blog started this past May.

 

Shanti Atkins of the Compliance Training Blog has an interesting blog post about the crippling trend of wage and hour litigation.  The post references a recent BusinessWeek article discussing how plaintiffs’ employment lawyers are "printing" money  with wage and hour cases.  One of the plaintiff’s lawyers is quoted as saying,

"I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that [a wage and hour suit] will."

In my experience, wage and hour issues are often misunderstood by employers.  Employers tend to run into problems when they ignore overtime regulations.  If you have questions I suggest checking out this handy reference guide to the Fair Labor Standards Act (FLSA) and consulting your employment lawyer.  You might also consider a wage and hour review to avoid misclassification of employees.

A federal court jury in New York says Isiah Thomas and the New York Knicks are liable for the sexual harassment of a former female executive.  The jury found the former employee was subjected to unwanted sexual advances and verbal insults.  A retaliation claim also was alleged.  While Isiah Thomas still maintains his innocence and vows an appeal,  the jury has spoken.  The Verdict:  the Knicks and its owner owe nearly $12 million in damages.  (Thomas escaped punitive damages but his employer was not so lucky).

Could the harassment lawsuit have been avoided?  

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.

Michael Moore of the Pennsylvania Employment Law Blog has a great post on this issue and the particular problems created by complaints by high level executives.

The executive absolutely cannot have any direct or indirect control over the investigation.  Claims involving the company’s CEO may require HR to go directly to the board of directors to protect the company.  Obviously, such action puts HR in an impossible position, so consider using outside counsel to manage the situation.

It is never easy dealing with claims of this nature but do not sweep it under the rug just because a high level employee is involved.  The stakes are high and you must follow your written policies and take the complaints seriously.  Ignore the behavior or retaliate at your peril.

Bloggers who hide their real identities may want to pay particular attention to a recent case.  A Texas judge has ordered the discovery of an anonymous blogger who posted alleged defamatory comments about a hospital located in Paris, Texas.  The ruling is likely to be appealed.

Anonymous users also posted comments on the blog which the hospital claims is confidential patient information.  The hospital claims that some of the commenters and perhaps the blog operator are current or former employees and the disclosure of such information violates HIPAA.

The Citizen Media Law Project does a nice job of framing the legal issue:

The primary question in cases seeking to uncover the identity of an anonymous defendant is how to balance the defendant’s First Amendment protected interest in engaging in anonymous speech against the plaintiff’s interest in pursuing a valid cause of action for the effects of nonprotected speech.

The post goes on to discuss the various standards used in determining whether an anonymous blogger’s identify should be revealed.  Right now, this issue is not settled among the courts and different standards have been applied in various cases.  But one thing is clear.  If you are a modern day Lone Ranger or Zorro, you should not have the expectation that your anonymity gives you the right to say anything you wish about other people and organizations. 

Even in Delaware, which has applied the most stringent standard, a plaintiff is not required to fully prove its case before an identity is revealed.  And in the Texas case it doesn’t appear any evidence was required before the plaintiff could learn the identity of the mysterious blogger. 

If you are concerned about material you are publishing it is probably best to seek the pre-publication advice of a media lawyer.   

Mark Toth, Chief Legal Officer of Manpower, has a terrific employment law blog post any small business owner should read.  Toth’s blog is creative and fun and his advice is right on the mark.  Follow his greatest hits and you are much more likely to stay out of trouble with your employees.

I particularly agree with Toth’s Employment Law Golden Rule:

Treat all employees the way you would want to be treated — honestly, objectively, consistently and fairly on a timely basis.

See also my blog post on Seven Ways to Avoid Employee Lawsuits.  Toth and I have very similar thoughts on this subject.  My number 1:  Treat Employees with Respect.  Seems like a basic philosophy but it is amazing how many employers forget to treat their employees with respect.  Employees that are humilated or treated in a disrespectful way are much more likely to sue your company.

 

Where should you incorporate your Iowa small business?  This question is asked a lot by Iowa_picmany prospective small business owners.  The question used to be surprising but after seeing and hearing numerous advertisements for Delaware and Nevada corporations on the Internet and on satellite radio it is definitely a legitimate question.

Delaware has reputation and history on its side.  Delaware’s Division of Corporations boasts that more than a half a million business entities make their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 60% of the Fortune 500.  Businesses, especially large ones, choose Delaware because of the state’s business laws and respected Court of Chancery.  Most observers say it is because of Delaware’s predictability. 

Nevada has recently exploded in popularity for many businesses.  This is due to Nevada’s pro-business climate, low-tax mentality and the lack of an information sharing agreement with the IRS.

Delaware or Nevada may offer viable options for some companies but in general most Iowa small businesses are probably wise to incorporate in Iowa.  First, Iowa has very low fees when it comes to incorporating your business.  It is a $50.00 fee to file Articles of Incorporation for a domestic corporation in the state of Iowa.  Further, it only a $30.00 fee every two years for a biennial report if you file online.  These fees are extremely low compared to other states.

Second, you won’t avoid Iowa taxes by incorporating your Iowa small business in Nevada or Delaware if you are doing business here in Iowa.  The tax and corporation laws of Iowa will require you to register your company and pay fees as a foreign corporation in Iowa and you will be required to pay Iowa state income taxes for any income earned.  (You also do not avoid federal income taxes by incorporating in Nevada despite the lack of an information sharing agreement with the IRS).

And the perceived court advantages in Delaware?  That might be fine for a large business that is actually going to litigate a case in Delaware but it is probably not cost effective for most Iowa small businesses to litigate their cases in Delaware.  Besides unless you have well-written forum selection clause in contracts your Iowa small business will likely end up in Iowa courts anyway.

If you have questions regarding where you should incoporate your Iowa small business be sure to contact a business attorney licensed in Iowa. 

Photo on flickr by rsgranne.