If you are starting a new business in Iowa it is important to know your registration and tax-related responsibilities.  The following is a list of helpful resources for the new business start-up in Iowa.

I have also placed these links on the right hand side of this Web site under the Resources section for future reference.

When reviewing the franchise agreement a prospective franchisee should pay careful attention to the territorial provisions contained in the agreement.  It is important to protect yourself from territorial encroachment and competition from both the franchisor and other franchisees.

Territorial encroachment is a frequent complaint from franchisees.  Usually this involves the franchisor granting a new franchisee a territory “too close” to an existing franchisee.  Sometimes it involves an affiliate of the franchisor placing an affiliated franchise (selling similar products) too close to the existing franchisee.  Unless the franchise agreement creates express protection for the franchisee’s defined territory, a court may be reluctant to find a franchisor encroached on the franchisee’s territory.

Be sure to review the territory provisions of the franchise agreement to make sure you have a protected territory.  The Iowa Franchise Act does provide some protections against encroachment.  The downside is that while these protections may help you in litigation the damage may already have been done when you get to that point.  Moreover, there never any guarantees of success in litigation.  Be proactive and discuss the territory provisions up front with the franchisor during the due diligence process.

Frank Felker of Radio Free Enterprise has an interesting take on what is in store for businesses in 2007.  His #1:

Downward pressure will continue on both your costs and your prices.
The Wal-Mart Effect has hit every segment of our economy. The world’s largest retailer has taught every consumer to expect the very lowest prices and every vendor to find the most efficient processes. Your challenge is to take advantage of the lowered costs while resisting the urge to lower your prices. The former is relatively simple thanks to Sam Walton and your trusty Internet connection. The latter requires you to deliver an offering whose value is truly superior to your competitors.

Is your business devoting resources to blog monitoring and blog response?  If not, you should.  According to Jaffe Juice blog, one of the Top Ten Alternative Marketing Trends for 2007 is blog monitoring.  The article quotes Drew Nessier who is the CEO of Renegade Marketing. 

Nessier says, "In 2007 marketers will enhance their ability to defend against potentially ruinous blog attacks by dedicating resources to blog monitoring and blog response. The role of Blog Monitor will finally become a full time position in the communications department, as opposed to the occasional activity of a lone blog enthusiast. In addition to tracking blog noise, the Blog Monitor will actively engage other bloggers, correcting untruths and responding to issues as they arise. Corporate blogs will also be an important defensive weapon, assuming the authors are empowered to tell the truth (even if that means admitting a product’s shortcomings)."

I agree.  With more and more blogs coming online it is critical for all companies, large and small, to monitor blogs regarding their products and services.  If your company has a blog it is also important to see who is linking to you and talking about you.  If you are a small company you do not need a full-time employee in a communications department to monitor blogs.  Through the use of RSS feeds you can effectively develop your own system to monitor the blog noise about your company for little or no cost.

What if your business is involved in high profile litigation?  If so, monitoring blogs is an absolutely necessity.  I believe communicating with bloggers is just as important as communicating with the traditional media and may provide even better PR if you do it right.

New York small business lawyer, Imke Ratschko, has some excellent advice regarding the care corporate officers should exercise when signing agreements.  As Imke points out, it is always important for a corporate officer to sign agreements and other documents using their corporate title.  Moreover, the officer should make sure to read the agreement carefully to make sure personal obligations are not hidden in the agreement.

Read agreements and sign them correctly.  These two pieces of advice are two of the easiest ways to avoid personal liability and maintain the corporate shield.  I know it is common sense but as Voltaire said, "Common sense is not so common."

George’s Employment Blawg, written by attorney George Lenard of St. Louis, has some excellent posts (see here and here) on the risks and liabilities associated with using Facebook for employment background checks.   Some of the risks may include discrimination claims and Fair Credit Reporting Act violations.  The use of other social networking sites such as MySpace have similar considerations. 

[Lenard] would advise employers to cut applicants and employees some slack. You were once young too and maybe did similar things — if not publicly on the Internet. Ask yourself how relevant the information creating the negative impression is to job performance.

If you are going to do Internet searches and use them as a basis for employment decisions, you better do so consistently, without regard to any legally protected classifications, e.g. race, sex, age. You should document them.

I would add that if employers intend to conduct background checks of any kind for prospective employees it is important to have them sign a release and authorization allowing you to conduct background checks.  In Iowa, many employers are using the Iowa Courts Online to conduct free background searches.  Using the release and authorization may make it safer from a legal standpoint but you still must be aware of discrimination and Fair Credit Reporting Act issues when using these online resources to conduct background checks.

It is also advisable to consult your employment lawyer before using these online resources.

   

Thanks to Tom Mighell of Inter Alia for including Rush on Business as the "Blawg of the Day" on December 26, 2006.  Tom is very well-respected in the areas of technology law and electronic discovery.  I have enjoyed reading his articles on several topics.  A couple of articles you may want to check out include:

EDD-ucating Yourself About Electronic Discovery and  RSS Resources You Can Use:  Automated Web Surfing for Lawyers.

Both articles are co-authored with Dennis Kennedy.  Be sure to check out the 2006 Blawggies from Kennedy.  There are some great law blogs in his list.

There are many great reasons to start a business blog.  Business blogs help you develop better relationships with your customers, enhance your position as an expert and build a sense of community for your business.  But it is important for businesses to look before they leap with blogs.  Some of the legal issues may include employment law, copyright infringement, defamation and privacy issues.  Here are seven things to consider before starting your business blog:

1.  Get advice from in-house and/or outside legal counsel with a good understanding of technology and blog law.  This area of the law is changing at the speed of light.  Talk with a lawyer that can help you navigate your way through these issues.

2.  Update your employment policies to cover blogs.  Many companies have policies that cover Internet use, email, cell phones and other technologies.  But do your policies cover blogs?

3.  Develop a corporate blogging policy.  Sample policies include IBM, Sun Microsystems and Yahoo.  (Thanks to Kevin O’Keefe for his post on the sample policies).  Make sure that employees understand the consequences of violating the blogging policies.

4.  Train employees on the benefits and risks of blogging.

5.  Determine whether your blog will allow comments and how you will deal with the information gathered through the blog.  (There may be privacy issues associated with this information).

6.   Appoint someone who will be in charge of the company’s blog(s).

7.  Develop and implement a system to monitor your blog.  Learn how to use RSS feeds to do this effectively.

You should consider a blog for your business.  It is an incredible marketing and communication tool.  Just remember to start off with the appropriate preparation and planning in order to avoid the legal risks and liabilities associated with blogging.

See also this informative article on the Legal Risks of Blogging.

Update:  The Des Moines Register had a nice article on business blogging on December 24, 2006.  Some featured bloggers included accountant Joe Kristan of Roth & Co., Hispanic marketer Nanette Rodriguez of Vivamedia, blogging coach Mike Sansone of Converstations, patent attorney Brett Trout of Brett Trout, P.C. and me.  Check out these sites to see how blogs can be effective tools for your business.

The Des Moines Register reported that the Microsoft trial recessed for the holidays on Thursday afternoon.  So far jurors have seen ten hours of the video taped deposition of Bill Gates and two hours of tape from a Microsoft competitor. 

The first live witness is expected to testify next week when an industry expert on liability issues is expected to take the stand for the plaintiffs.  I recently had the occasion to talk with Microsoft’s associate general counsel, Rich Wallis.  He thought jurors will pay close attention to live witnesses because so much of the case is being presented through video tape.

I am sure the lawyers, jurors and Judge Rosenberg could use the break.  Wallis told me the lawyers have been working about 15 hours per day during the trial.  Now that is what I call a full day.

In its January issue, Entrepreneur Magazine published its Annual Franchise 500 for 2007.  One of the more interesting articles in the issue had to do with conducting due diligence.  As I recommended in a previous post the article discussed the importance of interviewing as many franchisees as possible in order to gain information about the franchisor.  Unfortunately most prospective franchisees do not conduct even basic due diligence, the article says.  Here are highlights of the article:

If you want to know more than the splashy brochures and franchise salespeople will tell you, then roll up your sleeves.  You can use a variety of methods to dig deeper and get the real lowdown on a franchisor.  The good news:  Most of these techniques are cheap or free.

1.  Mine Franchisees:  Be sure to ask tough questions.  Don’t just shoot the breeze.  Also visit franchisees at their stores.  You get more information and it is an opportunity to see the franchise in operation.

2.  Dig in the UFOC:  The UFOC lists a great deal of information but many franchisees do not even give it a glance.  The UFOC will contain information about lawsuits, revenues and management.

3.  Ramp Up Research:  Search the Internet.  Are there any gripe sites?  See UPS Store www.thebrownboard.com and Quiznos www.toastedsubs.info as examples of gripe sites.  Be sure to take what you read on the Internet with a grain of salt and verify what you learn.

4.  Meet the Management.  Ask the tough questions of management as well.  One expert recommended that you ask the franchisor whether they will let you out of their franchise agreement if you are unhappy?  If they respond "Yes", they are lying and will say anthing to get you to sign.  (Franchise agreements are enforceable contracts and I have yet to deal with a franchisor that will let you out of an agreement voluntarily).

5.  Know the Market.  Do the market research and understand how the franchise fits into the competitive picture.  Also, think about how the market is going to change. 

6.  Get Advice.  The article advises to go to SCORE, have an accountant review the franchisor’s financials and have an attorney review the franchise UFOC and franchise agreement.

Update:  I received an email today from a franchisee regarding this post.  He pointed out that the most difficult  information to obtain and verify is franchisee profitability.  He pointed out that the profitability of the franchisor and the franchisees is not always related.  He correctly stated that 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.

Forbes Magazine had an interesting article that provides Ten Good Reasons Not to Buy a Franchise.  Number 1 on the list is Questionable Profitability.  That makes extensive due diligence all the more important if you are considering a franchise purchase.