Under California Law (Corporations Code §31005), a franchise means, a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which: (1) a franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor; and (2) the operation of the franchisee's business pursuant to such plan or system is substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor or its affiliate; and (3) the franchisee is required to pay, directly or indirectly, a franchise fee.
The California franchise law requires any offer or sale of a franchise to be registered with the Commissioner of Corporations on a detailed “Uniform Franchise Registration Application”. Certain offers and sales, however, are exempt from this requirement, if the franchisor meets minimum requirements for net worth, experience, and disclosure and has filed a notice of exemption with the Commissioner.
If registration is required, and the application is approved, the registration is valid for one year. The registration may be renewed for additional periods of one year each. The fee for filing an application for registration of a franchise offer is currently $675; the fee for renewal is $450. The fee for filing an initial notice of exemption is $450; the fee for each subsequent notice is $150. The government, or disgruntled buyers of yours, may obtain fines, rescission or reformation of the transaction, payment of refunds and damages, and/or a cease and desist order.
You can mitigate the risk of “franchising” in California by eliminating one of the three requirements first described above. The third requirement is compensation. Since getting paid is the primary reason for the transaction in the first place, this requirement cannot be eliminated.
So, there are only two further requirements that may be eliminated: (1) reducing your control to an insubstantial level over the operations and marketing of the business product or services sold or (2) licensing or selling a common trade name, trademark, or logo. Initially, you should decide whether a buyer of your business is more interested in (1) obtaining assistance in marketing the business, or (2) branding. “Branding” occurs if you license or sell to the buyer the right to use your trade name, trademark, and/or logo as the name of the buyer’s newly-acquired business and/or products and services.
If you eliminate the licensing of these branding rights, then the effect may be to eliminate this requirement of franchising, which becomes even more effective where you do not permit the buyer to use your trade name, trademark, and/or logo as the name of buyer’s business or in a substantive or primary way.
Where selling products or services can be done without branding, then allowing the buyer to operate under its own name may be the avenue to take, because you can then exert more controls on operations and marketing that assist the buyer in successfully selling your products or services. However, your control cannot reach the status of “substantial” controls.
You cannot tell the buyer substantially or explicitly how to operate (known as “design specifications”), but you can describe what generally needs to happen (known as a “performance specifications”). To the extent the buyer can do its licensed business in the manner that it chooses, it will not be deemed a franchisee. To the extent there is substantial control, the buyer may be deemed a franchisee, making you a franchisor that has not complied with the franchise laws.
An experienced business lawyer will work with you to tailor the transaction documents as much as feasibly possible away from a franchise structure. He or she would attempt to reduce either the transfer of intellectual property or your control over the business as a result of the transaction as much as possible. There is no guarantee, however, that your buyer, if unsuccessful in the business purchased from you, will not attempt to take advantage of the California franchise law remedies described above. As usual, success prevents disputes.
Important Proviso: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through my firm’s website located at http://www.BealBusinessLaw.com
Wednesday, March 17, 2010
Tuesday, March 16, 2010
Can my firm change an employee from a full-time basis to an as-needed or other basis?
An employment relationship in California is considered "at will" absent a union agreement or other express personal employment agreement with such employee. "At will" means that an employee may be terminated at any time for a any reason, or no reason, but not for a legally impermissible reason, such as age discrimination. Thus, the conditions of employment for an "at will" employee may also be changed, such as work description, pay, or otherwise, except as stated above and with some exceptions, which follow.
Check your employment policies to ensure there is no provision limiting this practice. Also, your firm must provide employment upon return from certain leaves to the same or similar job at the same or similar pay, working the same or similar hours in the same or similar location, unless the employee would have been laid off had he or she not gone on such leave, or if such employee's job is eliminated during his or her leave, and no equivalent or comparable job is available, then such employee will not be entitled to such reinstatement. These leaves include without limitation bereavement, family and medical, jury and witness, literacy, military, parents school activities, pregnancy disability, religious, and voluntary firefighter leaves.
Important Proviso: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through my firm’s website located at http://www.BealBusinessLaw.com
Check your employment policies to ensure there is no provision limiting this practice. Also, your firm must provide employment upon return from certain leaves to the same or similar job at the same or similar pay, working the same or similar hours in the same or similar location, unless the employee would have been laid off had he or she not gone on such leave, or if such employee's job is eliminated during his or her leave, and no equivalent or comparable job is available, then such employee will not be entitled to such reinstatement. These leaves include without limitation bereavement, family and medical, jury and witness, literacy, military, parents school activities, pregnancy disability, religious, and voluntary firefighter leaves.
Important Proviso: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through my firm’s website located at http://www.BealBusinessLaw.com
Thursday, February 11, 2010
Do I need to file a Fictitious Business Name (DBA) Statement? What happens if I don’t file a DBA? Can I prevent others from using my DBA?
There is so much conflicting and erroneous information circulating verbally and upon the Internet about fictitious business names (DBAs), corporate names, and trade names, that I feel compelled to present a substantial treatment of the subject in statutory terms, at least for the State of California.
Every person doing business for profit under a DBA must file a fictitious business name statement within 40 days of commencement of business, which is valid for five years from the date of filing, unless it is abandoned, or there is a change in the facts stated in the application (except a change in a registrant's residence address does not cause the statement to expire if that is the only change).
The following circumstances indicate a need to file for a DBA:
· Individual: When the registrant's family name is not part of the business name, and no other words suggest the existence of additional owners.
· Partnerships or other associations of persons: When the surnames of each general partner are not part of the business name, and no other words suggest the existence of additional owners.
· Corporations: When using a name other than the name registered with the Secretary of State.
· Limited Liability Company: When using a name other than the name registered as a limited liability company with the Secretary of State.
· Words that suggest the existence of additional owners: Company, & Company, & Associates, & Sons, & Group, etc.
The purpose of this law is to protect those dealing with individuals or partnerships doing business under fictitious names, and it is not intended to confer any right or advantage on individuals or firms that fail to comply with the law. The filing of a DBA is designed to make available to the public the identities of persons doing business under the DBA.
A DBA statement shall be filed with the clerk of the county in which the registrant has his, hers, or its principal place of business in California or, if the registrant has no place of business in California, with the Clerk of Sacramento County. The registrant may, but is not required to, file in further counties in California. Further filings may be indicated, as discussed after the next paragraph.
The penalty for not filing a DBA is that no legal action in the DBA name may be maintained in court until all filing requirements are completed. Also, please be aware that any person who executes, files, or publishes any DBA statement knowing that such statement is false, in whole or in part, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine not to exceed $1,000.
Here comes the more confusing part. The DBA law was not intended to eliminate duplication or similarity of fictitious names. The County has no authority to refuse a filing on grounds that the same or a similar name is already on file. It is recommended that you review the DBA Index to ensure that the name you choose has not already been registered. The filing of a DBA does not, of itself, authorize the use in California of a DBA in violation of the rights of another, as established under federal or California trademark laws or the California DBA or common law.
The filing of a DBA by a person required to file shall establish only a rebuttable presumption that the registrant has the exclusive right to use as a trade name the DBA, as well as any confusingly similar trade name, in the county in which the statement is filed, if the registrant is the first to file such a statement containing the DBA in that county, and is actually engaged in a trade or business utilizing such DBA or a confusingly similar name in that county. The rebuttable presumption created by this section shall be one affecting the burden of producing evidence. In other words, a same or similar business who can satisfactorily prove that it has previously used a same or confusingly similar name in that county may be able to legally stop you from using your name and make you terminate your registrations for that name.
Similarly, the filing of articles of incorporation in the case of a California corporation (or the obtaining of a certificate of qualification in the case of a “foreign” corporation) shall establish only a rebuttable presumption that the corporation has the exclusive right to use as a trade name in California the corporate name set forth in the articles (or certificate), as well as any confusingly similar trade name, if the corporation is the first to have filed the articles (or certificate) containing the corporate name, and is actually engaged in a trade or business utilizing that corporate name or a confusingly similar name. Thus, the filing of articles (or certificate) shall not of itself authorize the use in California of a corporate name in violation of the rights of another under federal or California trademark laws or the California DBA or common law, including rights in a trade name.
So, if there are both a corporation and a DBA registrant using the same or a confusingly similar trade name in a county, and both entitled to the rebuttable presumption, whichever has filed the DBA or filed the articles (or certificate) first in time and is actually engaged in a trade or business utilizing such DBA, corporate, or a confusingly similar name, shall be entitled to the presumption as against the other, that it has the exclusive right to use such DBA, corporate, or confusingly similar name, as a trade name in the county.
It behooves all businesses to determine prior to filing for a DBA whether other same or similar businesses have previously filed for the same or confusingly similar trade name in each county in which they desire to actually engage in a trade or business utilizing that name. Similarly, businesses should determine whether similar businesses have previously filed for the same or a confusingly similar trade name in each county in which they desire to actually engage in a trade or business utilizing that name, prior to filing corporate articles (or certificates) with the same or confusingly similar trade name.
In both cases above, it also behooves all businesses to determine prior to filing for either a DBA or corporate name whether such name would violate the rights (under federal or California trademark laws and the California DBA or common law) of another business in the same or similar business for a trade name actually engaged in a trade or business utilizing such DBA, corporate, or a confusingly similar name, in the county or counties you wish to do same. Wow, what a mouthful.
Failure to perform the above due diligence puts your business at risk of having to cease using your DBA or corporate name in one or more counties in California, or all of California, where other same or similar businesses have previously used or filed for the same or confusingly similar trade name. This will also eliminate in one or more counties, or all of California, any good will associated with your name prior to having to cease use of your name, confuse your business operations with other names you will have to use in substitution for your name, as well as waste your significant investment in the cost, time and effort initially used to file for your name.
Valuable Tip: The use of a truly unique name (such as “Exxon”) hugely simplifies the complications of all of the above issues, including especially the registration of federal trademarks.
Important Proviso: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through my firm’s website located at http://www.BealBusinessLaw.com
Every person doing business for profit under a DBA must file a fictitious business name statement within 40 days of commencement of business, which is valid for five years from the date of filing, unless it is abandoned, or there is a change in the facts stated in the application (except a change in a registrant's residence address does not cause the statement to expire if that is the only change).
The following circumstances indicate a need to file for a DBA:
· Individual: When the registrant's family name is not part of the business name, and no other words suggest the existence of additional owners.
· Partnerships or other associations of persons: When the surnames of each general partner are not part of the business name, and no other words suggest the existence of additional owners.
· Corporations: When using a name other than the name registered with the Secretary of State.
· Limited Liability Company: When using a name other than the name registered as a limited liability company with the Secretary of State.
· Words that suggest the existence of additional owners: Company, & Company, & Associates, & Sons, & Group, etc.
The purpose of this law is to protect those dealing with individuals or partnerships doing business under fictitious names, and it is not intended to confer any right or advantage on individuals or firms that fail to comply with the law. The filing of a DBA is designed to make available to the public the identities of persons doing business under the DBA.
A DBA statement shall be filed with the clerk of the county in which the registrant has his, hers, or its principal place of business in California or, if the registrant has no place of business in California, with the Clerk of Sacramento County. The registrant may, but is not required to, file in further counties in California. Further filings may be indicated, as discussed after the next paragraph.
The penalty for not filing a DBA is that no legal action in the DBA name may be maintained in court until all filing requirements are completed. Also, please be aware that any person who executes, files, or publishes any DBA statement knowing that such statement is false, in whole or in part, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine not to exceed $1,000.
Here comes the more confusing part. The DBA law was not intended to eliminate duplication or similarity of fictitious names. The County has no authority to refuse a filing on grounds that the same or a similar name is already on file. It is recommended that you review the DBA Index to ensure that the name you choose has not already been registered. The filing of a DBA does not, of itself, authorize the use in California of a DBA in violation of the rights of another, as established under federal or California trademark laws or the California DBA or common law.
The filing of a DBA by a person required to file shall establish only a rebuttable presumption that the registrant has the exclusive right to use as a trade name the DBA, as well as any confusingly similar trade name, in the county in which the statement is filed, if the registrant is the first to file such a statement containing the DBA in that county, and is actually engaged in a trade or business utilizing such DBA or a confusingly similar name in that county. The rebuttable presumption created by this section shall be one affecting the burden of producing evidence. In other words, a same or similar business who can satisfactorily prove that it has previously used a same or confusingly similar name in that county may be able to legally stop you from using your name and make you terminate your registrations for that name.
Similarly, the filing of articles of incorporation in the case of a California corporation (or the obtaining of a certificate of qualification in the case of a “foreign” corporation) shall establish only a rebuttable presumption that the corporation has the exclusive right to use as a trade name in California the corporate name set forth in the articles (or certificate), as well as any confusingly similar trade name, if the corporation is the first to have filed the articles (or certificate) containing the corporate name, and is actually engaged in a trade or business utilizing that corporate name or a confusingly similar name. Thus, the filing of articles (or certificate) shall not of itself authorize the use in California of a corporate name in violation of the rights of another under federal or California trademark laws or the California DBA or common law, including rights in a trade name.
So, if there are both a corporation and a DBA registrant using the same or a confusingly similar trade name in a county, and both entitled to the rebuttable presumption, whichever has filed the DBA or filed the articles (or certificate) first in time and is actually engaged in a trade or business utilizing such DBA, corporate, or a confusingly similar name, shall be entitled to the presumption as against the other, that it has the exclusive right to use such DBA, corporate, or confusingly similar name, as a trade name in the county.
It behooves all businesses to determine prior to filing for a DBA whether other same or similar businesses have previously filed for the same or confusingly similar trade name in each county in which they desire to actually engage in a trade or business utilizing that name. Similarly, businesses should determine whether similar businesses have previously filed for the same or a confusingly similar trade name in each county in which they desire to actually engage in a trade or business utilizing that name, prior to filing corporate articles (or certificates) with the same or confusingly similar trade name.
In both cases above, it also behooves all businesses to determine prior to filing for either a DBA or corporate name whether such name would violate the rights (under federal or California trademark laws and the California DBA or common law) of another business in the same or similar business for a trade name actually engaged in a trade or business utilizing such DBA, corporate, or a confusingly similar name, in the county or counties you wish to do same. Wow, what a mouthful.
Failure to perform the above due diligence puts your business at risk of having to cease using your DBA or corporate name in one or more counties in California, or all of California, where other same or similar businesses have previously used or filed for the same or confusingly similar trade name. This will also eliminate in one or more counties, or all of California, any good will associated with your name prior to having to cease use of your name, confuse your business operations with other names you will have to use in substitution for your name, as well as waste your significant investment in the cost, time and effort initially used to file for your name.
Valuable Tip: The use of a truly unique name (such as “Exxon”) hugely simplifies the complications of all of the above issues, including especially the registration of federal trademarks.
Important Proviso: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through my firm’s website located at http://www.BealBusinessLaw.com
Friday, January 15, 2010
How can I be fired for a Facebook post?
Most employment in this country (excluding collective bargaining and key employment agreements) is “at-will”, which means that you can be fired for any legal work-related reason or no reason. So, your employer may generally terminate you for a Facebook public posting. If you posted in a user-restricted area, you may have an action based upon your employer’s unlawful access, although you may have no reasonable expectation of privacy posting on Facebook or similar social networks, especially where your friends can open up postings to others. Be careful. Employers may legally monitor your electronic activity occurring upon company-owned technology and may be sophisticated enough to already have adopted an electronic media and communications policy, including a policy against the use of social media for other than business-related purposes, and then only when approved in advance by your employer.
IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit: http://www.BealBusinessLaw.com
IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit: http://www.BealBusinessLaw.com
Thursday, October 1, 2009
I want to protect my personal assets from my business. Can I use a trust? An LLC?
A trust does not protect any of your assets, unless you give up all of your rights to benefit from the assets. What you do need is a limited liability entity, such as a corporation or limited liability company, to protect your personal assets from your business assets, or even some of your business assets from other of your business assets, if any, as well. There is a caveat here, however. Lenders, landlords, and other financial parties will usually require your personal guarantee in addition to the limited liability entity's contract signature, especially in the case of newer and smaller entities. Thus, protection from many of the most common major contractual financial exposures is doubtful. If your business operation has technical risks, i.e. potential significant damage to persons or property that cannot be reasonably insured, e.g. giving helicopter rides or selling vitamins to the public, then limited liability is of potentially great value. Another consideration is that there are costs and efforts associated with organizing and maintaining limited liability entities, including an annual $800 franchise fee for the privilege of being a limited liability entity in California, whether your business makes a profit or not.
IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit: http://www.BealBusinessLaw.com
Thursday, September 17, 2009
How can I get sued without a signed and written contract?
Actually, you can enter into a contract in many ways without a signed, written contract. The legal key is to unequivocally accept the terms of any offer, which can be done (1) orally ("I agree and will do it."), or (2) performance (You perform as requested by the person offering consideration for same, e.g. a reward offer.), or (3) even by silence, if this is the custom between particular parties (You routinely allow a vendor to leave certain supplies in your shop.).
Although an oral contract is just as valid as a written agreement, there can be real problems proving its existence or its terms, when in dispute. Hint: "An oral contract is as good as the paper it's written on." Or: "It's her word against his." The other significant difference between oral and written contracts in California is that the time to sue for breach of an oral contract is shorter, i.e. two years, rather than four years, for written contracts.
There are some exceptions in California (the biggest being real estate transactions) of contracts that cannot be enforced without a writing. See, California Civil Code section 1624.
IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit: http://www.BealBusinessLaw.com
Wednesday, September 2, 2009
I work as an independent contractor with my present employer. Can they make me sign that I will not work with any client of theirs for one year?
Non-compete agreements are unenforceable in California with certain exceptions. There is widespread belief that this restriction applies only in the employer-employee relationship; however, that position is not supported by the language of the California Code, and it has been rejected by the courts. The Code protects independent contractors as well, especially independent contractors that are essentially employees, that is, persons who don't work for more than one "employer" at a time in their line of work.
IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit: http://www.BealBusinessLaw.com
IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit: http://www.BealBusinessLaw.com
Subscribe to:
Posts (Atom)