New York franchise agreements typically contain restrictive covenants against competition, or a franchise non-compete clause. Such provisions are meant to prevent franchisees whom have rights to operate a business modeled on the franchise from engaging in activities like operating a business that competes with the franchisor following termination of the franchise relationship. Most franchise agreements have a limited restrictive covenant term. Restrictive covenants in franchise agreements serve a number of purposes, including: Protecting the franchisor’s goodwill; Protecting the franchisor’s confidential information; Ensuring loyalty to the franchise network; and Preventing former franchisees from becoming future competition. In-term Covenants & Post-term Covenants: Franchise agreements shall often include two kinds of restrictive covenants: “in-term covenants” and “post-term covenants.” In-term covenants limit what a franchisee can do during the term of the franchise agreement (for example, restricting the franchisee from operating a competing business within a certain geographical vicinity during the term of the
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Finding an Efficient New York Business Lawyer for your NY Business
We here at Hayes & Simon obtain numerous emails and calls from potential clients in search of a New York business lawyer to act as part-time general counsel. The majority of these intakes come from referrals from present clients, referrals from other lawyers and some trickle in via this New York Law Blog and the Korean Law Blog. From our contacts, we believe that many smaller businesses in New York are having serious difficulties in finding attorneys in New York that are NY business savvy, have the ability to efficiently work for the client and/or have an inability to handle the specific issues the client is dealing with. This dismal situation seems to stem, primarily, from the high cost of top-notch legal services in NY and the lack of many top-notch New York lawyers working in the startup and growing business space. This reality is, only, partially true. Many great
Continue readingBuying or Selling A Business in New York? Do Your “Due Diligence”
Before buying or selling a New Yorkbusiness, make sure you understand how to perform a “due diligence” for the business. This is essential for all businesses whether you are the buyer or a seller. A good motivated seller of a business will, usually, receive a better deal if pre-due diligence work is performed in order to satisfy the potential requests of a buyer – in a timely fashion. We often see a buyer questioning documents produced when the documents are not produced in a timely manner. Recently, I was approached by a prospective client about selling a small business, and I asked if she knew what performing a “due diligence” was. The blank stare on her face was all the answer I needed. Many small business owners have heard the term, but know nothing about what it means to properly carry out the due diligence process. “Due diligence” is a
Continue readingNew York Age Discrimination Protection Basics
As part of our ongoing series of posts intended to familiarize you with New York and Federal laws you must follow if you are running a business in New York, it is important to understand the way the New York law protects employees from age discrimination. Age discrimination is, in short, when an employer makes employment or management decisions based on an employee’s age and not on his or her job performance, skills or qualifications. Employees are protected via multiple layers of laws and administrative bodies. Employees may be able to file an age discrimination suit at the U.S. federal, New York State and New York City level. Scope of New York Discrimination Claims New York age discrimination causes of action are not limited to hiring and firing. Claims for age discrimination can be based on age bias within the workplace (like passing over employees for promotion); failure to provide
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New York Shareholder, Member and Partnership Business Disputes In NY: New York Business Disputes & Litigation Basics
New York Business Disputes We handle numerous shareholder and member disputes. The main reasons for these disputes are because of the lack of an adequate Shareholder, Operations or Partnership Agreement, the lack of due diligence or nefarious acts by a member, shareholder or controlling directors. Analyzing whether to file a lawsuit is, often, a matter of economics. A civil law suit at the court of first instance may take over a year. Your attorney in New York will need to file a complaint to in a NY court, file a reply to the defendant, depose witnesses, file pre-trial requests and make numerous appearances in court and at pre-trial conferences. The process is cumbersome, time consuming and of course will not be cheap. Thus, we, always, sit down with our clients and do a detailed cost-benefit analyses. Many New York law firms push to file a lawsuit for obvious reasons, however,
Continue readingWinding Up Your New York Business: Essential Steps to Business Closure in New York
If you are looking to close your New York business, these are some of the many essential steps you should take. In most cases you shall require a New York Bankruptcy lawyers to assist in the windup process: Vote to Close the New York Business No matter what form your NY business has taken, you must get all owners’ approval to close the business. In some forms, it is easier to do than others. For example, if your New York business is a sole proprietorship, you simply make the decision on your own. If it is a New York limited liability company or partnership, you and your partners must agree to dissolve the business based upon the rules set out in your organizing documents and the laws of the State of New York. Dissolve your Business with the New York Government If your New York business filed documents with any
Continue readingNY’s Highest Court Rejects Expansion of Common-Interest Doctrine: NY Legal New Updates
New York’s Court of Appeals has reinstated the New York rule that the common-interest doctrine in New York only applies in the context of actual or threatened litigation. The New York common-interest doctrine is a legal concept in New York’s Mergers & Acquisitions Law that provides an exception to the general rule that attorney-client privilege is waived when protected information is shared with a third party – provided that the communication furthers a near-identical legal interest shared by a client and a third party. This doctrine protects M&A transactions in New York in this limited regard when companies seek to execute the transaction because both companies share a common legal interest at that time, but only when the information concerns legal advice in pending or reasonably anticipated litigation. However, the doctrine does not extend beyond this exception. Recently, the lower Appellate Division in New York attempted to expand the protection provided
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Validity and Enforceability of Electronic Signatures in New York
Federal law governs, in most cases in New York, when the use of an electronic signature is valid and enforceable. The U.S. Electronic Signatures in Global and National Commerce Act (also called ESIGN Act) defines an electronic signature as “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with intent to sign the record.” This definition covers a broad scope, as businesses use different means, methods and technologies that create electronic signatures, including: Check boxes or buttons that state you agree to certain terms and conditions; PIN numbers or passwords; Signing an electronic keypad; or A graphical representation, image or a scan of a handwritten signature. The ESIGN Act protects the validity and enforceability of signatures made electronically, including: A signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or
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Should I Purchase a Franchise Or Start My Own Business in New York: Six Factors For Your Consideration
Choosing between franchise or starting your own business in New York is an important choice that can have a major impact on your future. The choice may, ultimately come down to your personality. Weighing the pros and cons of purchasing a franchise against starting a non-franchised business begins with some self-reflection. If you are an independent person that likes to experiment or wants to blaze your own trail, a franchise with rigorous systems and proscribed rules is probably not for you. If you want to run a business, but do not know where to begin, a franchise with its own established processes and IP may be the right choice for you. Of course, your initial budget is another factor to weigh. Beyond the above introspection, the pros and cons of a franchised business versus a non-franchised business in terms of both investment and goals for starting a business should be
Continue readingNegotiating New York Royalty Agreements
When negotiating the use of your intellectual property, patent or process in exchange for royalties, these three basic tips are key when commencing negotiating New York royalty agreements and royalty agreements throughout most of the world. This week, we discussed some lessons learned from the recent news that the famed Broadway troupe Blue Man Group was sued over a dispute over royalties brought by a composer as an example of how not to handle setting up a royalty agreement. Here, we’ll discuss factors to keep in mind while negotiating a royalty agreements so you can (hopefully) avoid issues. Words Matter – as do Nuanced Agreements Definitions, requirements and terms do not always mean what you think they mean. That is why you should include a section defining material terms in your agreement. These definitions can be crucial, and must be discussed with your attorneys so that the final document is clear and
Continue readingObtaining A New York Liquor License
Qualifying for a liquor license in New York State may seem straightforward, but will get complicated if you do not know the basics. The application process starts with choosing your business’s location in New York, because it can impact your license application. A New York business selling alcoholic beverages must be 200 feet from schools and religious buildings. Generally, you must also consider that a license for on-premises liquor consumption may be granted for any premise within 500 feet of three or more existing premises licensed and operating with an on-premises liquor license. This rule can be waived by the New York State Liquor Authority if it determines that the license would be “in the public interest” after consulting with the local Community Board and holding a public hearing commonly referred to as “The 500-Foot Hearing.” Additionally, only qualified persons can obtain a New York State liquor license. The personal
Continue readingNew York Independent Contractor or Employee? Taxi Union Sues Uber
Lawyers, in New York, representing 5,000 Uber drivers in New York City filed a lawsuit in NY on behalf of 10 of these alleged New York employees in federal court in Manhattan last week accusing the ride-share company of depriving these New York drivers of various employment protections they should have by declaring them as “independent contractors” rather than treating them as employees. This New York independent contractor lawsuit is a pivotal case that can lead to changes in Independent Contractor Law/Employment Law in New York. We suggest a review of your independent contractor agreements by your attorney and, also, advise following this case closely if you have hired independent contractors. Get your New York attorney on this matter immediately. It is essential to have a carefully drafted independent contract agreement and protocols in place to assist in guaranteeing that an independent contractor is not deemed an employee. New York Taxi
Continue readingRegistering Your New York Nonprofit For Fundraising Purpopses
If your New York nonprofit is fundraising in New York, then you may likely need to register with the New York Attorney General’s office. Before soliciting contributions from individuals, foundations, corporations or government agencies within New York, a New York nonprofit must register with the NY Attorney General’s General Charities Bureau, unless it falls within one of the many exceptions: Exceptions to the New York Nonprofit Filing Requirements Religious organizations or other organizations with a religious purpose (i.e., a religious school); Educational institutions that solicit contributions only from alumni, the student body, faculty, trustees and their families, and other educational organizations that report to or are chartered by the Board of Regents of the State University of New York are exempt; PTAs (Parent-Teacher Associations); Fraternal, patriotic, social or alumni membership organizations that limit their solicitations to its membership; Law enforcement support groups, veterans organizations, and volunteer firefighter/volunteer ambulance service organizations; Any
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Terminating A Franchise Agreement In New York: NY Franchise Law Basics
The termination or cancellation of a New York franchise relationship requires planning, a thorough understanding of your particular New York franchise agreement and procedural formalities. Typically, it is advisable to consult with your franchise lawyer. New York Franchise Terminations (Franchisee Considerations) For example, preparation should begin before signing a franchise agreement by a New York franchisee. Before signing, a would-be franchisee should consider the written terms outlining the right to terminate the franchise agreement. Other clauses, of course, should be reviewed. This post, only, addresses one issue of many that a franchisee should consider. Typically, a franchisor shall lay out several conditions it would consider to be breaches of the franchise agreement that trigger termination. These conditions will not afford an opportunity for either party to cure or correct the specific condition. These incurable breaches are, typically, material breaches of franchise agreement and, often, New York law. In some cases, a
Continue readingStarting a New York Restaurant? New York Restaurant Law
Starting a restaurant in New York involves significant consideration of New York state and local health and safety regulations. Because restaurants and eateries are all about serving food, New York subjects restaurants to significant regulations regarding food health and safety. The New York State Department of Health has many regulations for food service establishments, including coverage of: employee cleanliness issues; employee hand washing and food handling; employee health issues, such as prohibition from working if they have certain illnesses; washing of fruits and vegetables; reheating and thawing food; cleaning and sanitizing utensils; and garbage storage and disposal. The NYS Department of Health has a guide and other resources that can help you ensure you are meeting regulatory requirements. In addition, if your restaurant is in New York City, there are additional handbooks containing local guidelines that you must follow, including how to obtain a New York City Food Handler’s License. New
Continue readingLiability of New York Shareholders for Unpaid Debt of a New York Company
If you reside in New York or wish to run a business in New York , it may be convenient to incorporate a business in New York. But before you do so, you should know a major disadvantage of incorporating a business in New York. Business owners tend to desire the protection that incorporation gives to its shareholders’ personal assets. But you should know of a significant exception to that rule in New York. Under N.Y. Business Corporation Law § 630, the ten largest shareholders in any non-public company can be held liable for wage claims made by corporate employees. This includes salaries, overtime, vacation, holiday, severance pay and a whole host of other types of pay. To compound matters, liability under this law is “joint and several,” meaning that a claimant can enforce a judgment against just one of the ten largest shareholders, who would then have to seek
Continue readingFactors to Consider When Forming a Corporation in New York
New York businesses are not bound to incorporate within the state to operate within New York State. In fact, start-up businesses in New York should consider incorporating outside of New York based on several factors for consideration. Some choose to keep things simple by incorporating or forming an LLC in New York, while others opt for more “business friendly” states and incorporate in Delaware, Nevada or Wyoming. In some cases, even if you wish to establish a business in New York, it is advisable to form a company outside New York and enter New York as a foreign business – one of the many reasons is the New York may impose liability on company shareholders. Here are some of the more important factors to consider when choosing a state for incorporation: Setup & Recurring Fees While a minor consideration in the grand scheme of establishing and operating a business, you
Continue readingForeign Nationals Can Work for Their Businesses in New York
If you are a foreign national living in New York, it is not impossible for you to start a business. Starting a business, in New York, does not, in most case, even require residing in New York or even having the legal ability to reside in New York. If you are looking to start a business in New York as a foreign national or resident alien, it may be advisable, however, to be aware of the immigration requirements before you get started, since you may wish to live, work and reside in New York in order to conduct your business. According to the U.S. Small Business Administration, aside from U.S. citizens or naturalized citizens, if you are an individual with the following immigration status, then you can work for your business in New York: Green Card Holders – Also known as “permanent residents,” green card holders can work, live and study
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New York Non-Compete & Confidentiality Agreements
Business in New York can be highly competitive, and relies, in part, upon a business’s ability to protect valuable information disclosed to current and past employees. Many NY companies feel that implementing non-compete agreements and other contractual obligations will encourage employee retention overall and protect information should an employee leave. It is important for New York businesses to understand, however, that there are restrictions to when and how non-compete agreements can be enforced. Traditionally, non-compete agreements in New York are used in companies and industries involving sensitive proprietary information and/or trade secrets. Non-compete agreements are commonly found across many industries regardless of size or products or services offered. They can take many forms depending on the information to be protected, including confidentiality agreements (prohibiting use or revealing information) and non-solicitation agreements (prohibiting approaching customers, poaching employees or contacting vendors). New York Courts consider the enforcement of a specific non-compete agreement
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Buying a Business in New York
When buying a business in New York, we recommend a more nuanced approach that contemplates matters beyond a mere cost benefit analysis. Small businesses are the engine of the American economy. According to a 2012 Small Business Administration report, small businesses “produced 46 percent of the private non-farm GDP in 2008 (the most recent year for which the source is available), compared with 48 percent in 2002.” New York is one of the best places to establish a business in many industries, because of its educated labor force, high net worth and business infrastructure. Here are a few of the important steps to consider when buying a New York business. What is the Deal Structure? When buying a NY small business, consider the reason for the purchase. The reasons shall, often, dictate the structure of the purchase and the risks associated with the anticipated deal. What is the primary reason for the
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