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Business /Franchise Law FAQ

While the lawyers of Flader & Hirji, LLP make these answers to Frequently Asked Questions (FAQs) available to you, please note that laws change frequently, which could change the answers to these FAQs. There is no substitute to getting a consultation with an attorney to discuss your specific matter. Take advantage of a Free Initial Consultation that the lawyers at Flader & Hirji, LLP (“F&H”) will provide to you by calling us toll free at 888-412-9799 today. You will not be charged anything for the initial personal consultation to discuss your matter.

Flader & Hirji, LLP has several lawyers who have an undergraduate degrees in business and accounting as well as masters degrees in taxation from USC. These attorneys also have prior experience working for large international C.P.A. firms. These attorneys are well equipped to assist you with formation strategy for your new business ventures, assist you in negotiating agreements, and, if necessary, handle any litigation involving complex financial transactions.

Q. 1. Do I need a lawyer for everyday business matters such as forming a corporation or signing a lease?

F&H A. 1. You should always retain a lawyer as corporate formation has many legal and business issues which may not be apparent. For example, you may need to decide which State is best for your incorporation, what other legal entity forms may be available instead of a corporation, as well as what to include in the provisions of your company’s bylaws, which will affect how you operate your company.

What some consider a “simple lease document” can actually contain very complex terms that are important for you to fully understand. A lawyer can assist you in negotiating some of those terms with your lessor which can save you a significant amount of money. For example, we assisted a client in eliminating a personal guarantee on a lease document as well as changing the rent adjustment clause to 2% every two years from the standard consumer price index clause that would have increased the rent by approximately 3 % each year. These two changes saved our client thousands of dollars in future rent and eliminated the personal liability on the contract.

Q. 2. What are the factors I need to consider in choosing the type of entity I form for my business?

F&H A. 2. There are numerous factors you should discuss with your lawyer when picking a legal entity for your business. Some entities such as a “C” corporation result in the double taxation of the income, unless a Subchapter S election is made. This election is not available if any of the owners of the corporation are foreigners or if there are more shareholders that what is allowed for Sub S corporations. You should consider which State provides the best legal and tax benefits to the legal entity you want to form.

The amount of risk involved in the business planned for the entity can also influence the type of entity you should form. The quantity and dollar amount of the transactions the business will generate is also important in your decision. There are numerous entities besides a corporation which can be used such as limited liability companies, limited liability partnerships, general partnerships, etc. Take advantage of a FREE consultation with the lawyers of Flader & Hirji, LLP by calling us toll free at 888-412-9799 to schedule an appointment.

Q. 3. What do you charge for your business law and franchise law services?

F&H A. 3. In order to answer that question, we need to learn more about your proposed transaction or issue. Take advantage of our free consultation by calling us toll free at 888-412-9799 and discuss the matter with us in person which will allow us to review your matter at no cost to you.

Once we review your matter, we will then provide you with our opinion of what services are necessary to properly assist you and what the cost of those services will be. You are not obligated to retain us and everything you share with us will be confidential.

Q. 4. What services can you provide to a business that wants to become a franchisor and franchise its concept?

F&H A. 4. We have and continue to represent franchisors in various states including California. One of the main tasks we can assist you with is the drafting of your Franchise Disclosure Document which must comply with the Federal Trade Commission requirements as well as those of the various states in which you plan to operate and which require you to register with them.

California is one such state where you must obtain approval from the California Department of Business Oversight in connection with your Franchise Disclosure Document. We have been successful in obtaining such approvals for our clients. In addition, we can assist you in drafting the various agreements that will become part of your franchise documents such as the franchise agreement, the real property leases or subleases for the locations, promissory notes, security agreements, and compilation of other documents you will need for your franchisor package. We can also provide you with litigation services in the event you require such service in connection with a franchisee in your system.

Q. 5. Do I need audited financial statements for my business if I want to become a franchisor?

F&H A. 5. Yes. You do need audited financial statements. We have advised some of our clients to form new companies for the franchisor entity in order that the initial audits required will not consist of expensive and extensive work by your C.P.A.s.

Q. 6. What kind of services are you able to provide to an investor that wants to become a franchisee?

F&H A. 6. The most important service we can provide is to review the Franchise Disclosure Document of the franchisor you are considering and to provide you with our evaluation of such franchisor based on our extensive experience. You want to learn about the satisfaction of other franchisees by reviewing the litigation section of the Franchise Disclosure Document which lists lawsuits between the franchisor and franchisees and by calling numerous other franchisees of the system from the list of existing franchisees that the franchisor is required to provide to you.

You should receive the Franchise Disclosure Document at least 14 days before you transact any business with the franchisor. This time period is important in order that you and your attorneys can adequately review all of the complex agreements you will be executing if you decide to proceed with the investment in the franchise.

Q. 7. Can your firm provide accounting and tax services to me?

F&H A. 7. No. We do not provide accounting or tax services. However, our accounting and tax background does allow us to provide you better insight on your legal matters. We also can assist you with finding an accountant for those business needs.

Q. 8. Does your firm provide litigation services?

F&H A. 8. Yes. We are able to handle all types of business litigation. We do not provide litigation services in employment matters and for workers compensation cases.

Q. 9. Can you assist me with business law matters in other states?

F&H A. 9. Yes. An attorney can generally provide you with business transactional legal services in most states and not just the state in which he or she is licensed. Although an attorney may only appear in the courts of the states in which he or she is licensed, attorneys can, on a limited basis, obtain permission to make appearance from the courts of the states in which they are not licensed. Our firm has lawyers licensed in California and Nevada.