Frequently Asked Questions
Business Law FAQs
1. What type of business entity should I choose for my company?
The right business structure depends on your goals, industry, ownership arrangement, and tax considerations. Common options include sole proprietorships, limited liability companies (LLCs), partnerships, and corporations. Each structure offers different levels of liability protection, management flexibility, and tax treatment. An attorney can help evaluate which option best fits your business objectives.
2. Why do I need a written operating agreement or shareholder agreement?
Written agreements establish the rights and responsibilities of owners, management procedures, voting requirements, profit distributions, and dispute resolution processes. These documents can help prevent misunderstandings and provide guidance when disagreements arise between owners or partners.
3. When should I have a lawyer review a business contract?
Business contracts should be reviewed before they are signed. Even agreements that appear straightforward may contain provisions regarding liability, termination rights, payment obligations, non-compete restrictions, indemnification, or dispute resolution. A contract review can help identify potential concerns before they become costly problems.
4. What should I do if a business partner and I have a dispute?
Partnership disputes should be addressed as early as possible. Many disagreements involve ownership interests, management decisions, financial obligations, or business operations. Reviewing governing documents and understanding each party’s rights can help determine the most effective path toward resolution.
5. Can I buy or sell a business without an attorney?
While it is possible, purchasing or selling a business often involves significant legal and financial considerations. Transaction documents may address assets, liabilities, contracts, employees, intellectual property, financing, and tax implications. Legal guidance can help protect your interests throughout the process.
Franchise Law FAQs
1. What is a Franchise Disclosure Document (FDD)?
The Franchise Disclosure Document, commonly called an FDD, is a legal document provided by a franchisor to prospective franchisees. It contains important information regarding fees, obligations, litigation history, financial requirements, restrictions, and other details that can impact a franchise investment decision.
2. Should I have a franchise agreement reviewed before signing?
Yes. Franchise agreements are often lengthy and contain provisions that may significantly affect your rights and obligations. Reviewing the agreement before signing can help you better understand fees, operational requirements, renewal rights, transfer restrictions, and termination provisions.
3. What is the difference between a franchise agreement and an FDD?
The FDD provides disclosures about the franchise opportunity, while the franchise agreement is the binding contract that governs the relationship between the franchisor and franchisee. Both documents should be carefully reviewed before making a franchise investment.
4. Can I negotiate a franchise agreement?
Some franchise agreements offer limited opportunities for negotiation, while others may be largely standardized. The ability to negotiate often depends on the franchisor, the size of the franchise system, and the specific circumstances of the transaction. An attorney can help identify provisions that may warrant discussion.
5. What happens if I want to sell or transfer my franchise?
Most franchise agreements contain specific requirements regarding ownership transfers and sales. Franchisees may need franchisor approval and must comply with certain conditions before completing a transaction. Reviewing these provisions in advance can help avoid delays and unexpected complications when planning an exit strategy.
