More Legal Perspective On Adjusting To Changing Environments
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More Legal Perspective On Adjusting To Changing Environments

More Legal Perspective On Adjusting To Changing Environments

Even amid a global pandemic and conflict overseas, the franchise industry continues to experience growth.  Yet, like all businesses in the current environment, multi-unit franchise owners are experiencing issues such as finding and keeping talent, rising costs, and the threat of increased inflation.

As the world continues to move past Covid-19, consumers feel more comfortable getting back to "normal" and that’s driving business for franchise owners.  In addition, the increase in activity has many multi-unit franchise owners wanting to take advantage of other profitable brands and locations.

Ultimately, when looking at growth, we advise business owners to have an A, B, and C plan to account for change and an exit plan.  As you are looking at getting into a new brand, partnership, or “deal,” you should know how you can get out of it. The pandemic has taught all business owners that it is better to prepare for the inevitable before it happens!  It is better to have a plan through it all, even if you have no thoughts on exiting or moving away from the business.  Instead, we encourage business owners to look at planning through the lens of "change." If you or your business experience any change, whether expected or not, strategies based upon specific scenarios can set you up for better success to be agile when change comes.

We reached out to Michael Einbinder, franchise attorney with Einbinder & Dunn, for some legal perspective. Here is what he shared with us:

When working with clients on devising a succession plan, one of the most critical issues is retaining and motivating talented executives and managers.  The last thing a company in transition needs is to have its top talent leave the company as it considers or implements its growth and succession strategies.  In the succession planning phase, which is frequently a time of stress for employees concerned about a possible restructuring of a business, it will be helpful to take steps to ensure that these people stay with the company.  One way to do that is to enter into an employment contract that assures employment at agreed-upon compensation for a significant time.  Such agreements often contain a provision referred to as a "golden handshake" that provides a severance package if an executive loses their job due to changes in the company.   Employment agreements can also include equity grants with vesting periods that reward important personnel with an ownership interest in the business over time as it goes through and proceeds with a restructuring.

Businesses contemplating a change in control or restructuring should also ensure they have documents requiring employees to maintain the confidentiality of proprietary information and trade secrets.  Similarly, companies may want to ensure that non-compete agreements bind top talent, so they don't lose such employees to competitors.   The law is changing concerning trade secrets, and non-competes and businesses should consult counsel to ensure that documents are updated.

The only thing that is constant is change.  Ensure your multi-unit franchise business, personal financial goals, and vision for your business and family can be achieved and also protected when adjusting to change in our environments.

Kendall Rawls knows and understands the challenges that impact the success of an entrepreneurial-owned business.  Her unique perspective comes not only from her educational background but, more importantly, from her experience as a second-generation family member employee of The Rawls Group - Business Succession Planners.  For more information, visit www.rawlsgroup.com or email info@rawlsgroup.com

Published: April 11th, 2022

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