Business Purchases, Sales, and Franchising

Flourish

To flourish means “to achieve success.” Success is the general goal of every small business owner. Specifically, success opens more doors to the small business owner who is no longer consumed by the thought of making it past the initial growth stage. For some small business owners, success opens the door to more rapid growth through business mergers and acquisitions. For others, success leads to franchising, either as a franchise or franchisor. Success can also lead to exit, and with it, the complete sale of your business or its assets. Dom Law has worked with small business owners at every stage of their success, including Business Purchases, Mergers and Acquisitions, Franchising, and Business Sales.

Business Purchases

The decision to purchase a business is one made by many small business owners looking to either grow their existing business, expand into a new line of business, offensively eliminate local competition, or gain access to untapped markets. Generally, a successful business purchase is the product of due diligence, research, negotiation, and document drafting.
When purchasing a business, the small business owner may be purchasing the business along with all its assets and liabilities of that business. Another common strategy is to simply purchase all the assets of the business. Typical to most business purchases is the acquisition of the tangible and intangible assets. Tangible assets include items such as real property, furniture, fixtures, and equipment (“FF&E”), and inventory. Intangible assets include intellectual property such as trademarks and copyrights, customer books and records, and the goodwill associated with the business being purchased.
Legally, the purchase itself occurs by transfer of ownership in the business by way of a purchase agreement. This is a legal document that describes the terms of the purchase, assets being purchased, and spells out the relationship of the parties both during and after the acquisition, which can include covenants of non-competition and non-solicitation. For example, it is common to negotiate a transition services agreement as part of a business acquisition in order to ensure customers are properly transitioned from the purchased business to the purchasing business. There can also be very specific tax consequences to a business purchase; tax consequences that should be accounted for before, during, and after the acquisition.

The Team at Dom Law has guided countless small business owners through successful business purchases and asset purchases, including the following:

  1. Conducting due diligence for the intended business purchase.
  2. Performing necessary legal and tax research necessary to mitigate unintended consequences flowing from the purchase.
  3. Negotiating the material terms of the business purchase, which might include preparation of a notice of intent or term sheet, and nondisclosure and confidentiality agreements.
  4. Drafting and Preparing the asset purchase agreement for the purchase, including necessary disclosure schedules, certificates, and affidavits.
  5. Serving as escrow and closing agent for the business purchase.
  6. Working with commercial lenders and investors financing the business purchase, including SBA loans for working capital and the purchase itself.
If you are small business owner considering a business purchase, the Team at Dom Law can assist you through every step of the deal.

Mergers and Acquisitions

Most small business owners associate the term “mergers and acquisitions,” or an “M&A” with larger corporations and Wallstreet Fortune 500 companies. Nevertheless, the M&A world is just alive in the small business community as it is on Wallstreet.
In certain circumstances, a business purchase is a specific type of M&A which includes a substantial acquisition of an interest of a target company. In other circumstances, an M&A includes a consolidation of separate companies through a structured sale of stock or equity in those companies.

Generally speaking, mergers and acquisitions are more complicated than just a business purchase or business sale, consisting of multi-layered and leveled deals which can include the following types of M&A transactions:

  • Private Mergers;
  • Stock or Equity Acquisitions;
  • Asset Acquisitions; and
  • Management Acquisitions.
Small business owners faced with such complexities are advised to contact the Team at Dom Law for a free business law consultation for help navigating the complexities abound in any M&A.

Franchising

Starting from scratch is fun and exciting but can be a challenge for some small business owners. For certain small business owners and entrepreneurs, franchising may be the answer. Franchising carries with it certain assurances which are the hallmark of a successful franchise operation and is a great option for any small business owner who may be thinking of purchasing an existing business or selling their own small business.
A franchise is a bundle of intellectual property rights that are packaged and licensed by the franchisor to a small business owner, the franchisee. That package can include trademarks, copyrights, protected access to confidential information and trade secrets such as sales strategies and marketing materials, and ongoing training and support. As the franchisor, offering this package typically carries with it the right to receive an initial franchise fee, and continuing royalties and commissions related to each franchisee, rights are less subject to the law of diminishing returns which plague many fast-growing small businesses.

Dom Law has worked with small business owners as both franchisees and franchisors. For a franchisee, this includes the following:

  1. Researching possible franchises for purchase.
  2. Reviewing the Franchise Disclosure Document, or (“FDD”).
  3. Reviewing and negotiating the Franchise Agreement.
  4. Working with and representing the franchisee during site acquisition and build out.
  5. Providing continuing legal counsel to the franchisee to ensure they receive ongoing training and sales support and other rights afforded to them under the Franchise Agreement.

Dom Law is also experienced in working with successful small business owners seeking to transition their business towards a franchised operation. This includes the following:

  1. Drafting and Preparing the Franchise Disclosure Document, Franchise Agreement, and ancillary documents necessary for a Franchise Offering, including the Operations Manual.
  2. Researching and Advising franchisors through compliance with each state’s disclosure requirements and those disclosure requirements mandated by the Federal Trade Commission under the Franchise Rule.
  3. Registering the necessary trademarks and copyrights necessary for a successful franchise offering.
  4. Representing the franchisor in potential franchise sales, including documenting exchanges of Item 23 Receipts.
  5. Ensuring maximum protection of the franchisor’s intellectual property with a trade secret protection program that protects the franchisor’s “secret sauce.”
Whether you are considering franchising your own small business as a franchisor or thinking of becoming a franchisee by purchasing a franchise, the Team at Dom Law is prepared to serve you with all that franchising entails.

Business Sales

When many small business owners dream of success, they do so with an eye towards exit. Selling your small business, or cashing out, can be the pinnacle of success for the small business owner. For other small business owners, selling their business is the natural evolution of what they set out to build. Regardless of whether you are thinking of selling your small business to build something new or simply preparing for retirement, there are countless considerations involved with such a sale.
These considerations should include the tax consequences associated with the sale, including a focus on mitigating capital gains and other taxable events related to the sale. Other considerations could include whether to retain certain rights to the intellectual property of your business through licensing as a means to create a continuing revenue stream to fuel your retirement.

The Team at Dom Law has guided countless small business owners through successful business sales, including the following:

  1. Conducting due diligence for the intended business sale.
  2. Performing necessary legal and tax research necessary to mitigate unintended consequences flowing from the sale.
  3. Negotiating the material terms of the business sale, which might include preparation of a letter of intent or term sheet, and nondisclosure and confidentiality agreements.
  4. Drafting and preparing or reviewing an asset purchase agreement for the purchase of the business assets,, including necessary disclosure schedules, certificates, and affidavits.
  5. Serving as escrow and closing agent for the business sale.
  6. Working with the purchaser’s legal team and bankers to maximize the value and protections realized by our clients.
  7. Structuring legacy acquisitions and sales of family businesses and closely held corporations.
The sale of a small business, much like a business purchase or merger and acquisition, is a complicated endeavor with many moving parts that must be structured in line with the personal and business goals of the small business owner. The Team at Dom Law has worked with countless small business owners in the sale of their small businesses to ensure that those goals are aligned, and that the small business owner receives the true worth of their legacy.

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