Business Law – Page 2

Co-Founding a Startup With a Friend: What Could Go Wrong?

September 17, 2021August 18, 2021 by foldenauer.law

Few things are more fun than brainstorming with a like-minded friend about ideas that can change the world. At first, it seems like implementing the ideas and sharing your brilliant spark with the world could not be more fun, but eventually you will have to face lots of harsh realities. How many people have married their soulmates only to find their marriages plagued by conflict about money? The same can happen when friends start a business together; you become financial partners, and having similar ideas about your company does not automatically translate into having similar ideas about money. The following are three common sources of conflict between startup co-founders. A San Diego business partnership dispute lawyer can help you resolve them.

Dividing the Workload and the Profits

When the project is fun and aspirational, no one thinks about who puts in how much work because the work is its own reward. Once your idea becomes a business venture, you should put in writing what each partner’s responsibilities are and what share of the profits each person will receive, if and when the company becomes profitable. You should also formalize decisions about salaries for the phase when your startup is operating with modest funds. Skipping over these basics is a recipe for resentment if one co-founder gets to spend his day enthusing on social media about the product and sweet-talking influencers while the other spends their days schlepping to the post office to ship orders and responding to emails with customer complaints.

When and How to Go Big

Nothing sows discord among friends like the promise of wealth. The fun of owning a small business is at risk when the officials in suits (or, perhaps in this generation, in cargo shorts) show up and start talking about huge amounts of money. Once you start getting offers from big time investors, you should talk to a lawyer about formalizing an agreement with them, so that all the co-founders can be confident that they are getting a fair deal.

When and How to Get Out of the Game

One of the most conflict-prone aspects of operating a startup is when one of the partners decides to leave the business, or when the other partners want to force them out. Sometimes the partner who is leaving the day-to-day operations wants to keep some ownership in the business, which could become much more valuable if the company goes big later on. For these reasons, your initial business organizing documents should spell out in writing how to handle buyouts, transfers of ownership, and dissolution of the company. There is even more room for things to get ugly if one partner accuses another of mismanagement of the company’s finances.

Contact Foldenauer Law Group About Startup Partner Disputes

A business partner dispute lawyer can help you prevent and resolve disputes among the partners in a startup at any phase in the company’s life cycle. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.

Resort to the Law, Not to Lawlessness, When Business Partnerships Go Bad

September 17, 2021August 13, 2021 by foldenauer.law

More than half of all business partnerships end with the business dissolving because of a dispute between the owners. The business partners who stay together until they retire or until they agree that one partner will buy out the other’s ownership interest are the exception to the rule; they only account for about 30% of cases. Business partnership breakups that are messy enough to require the intervention of a judge are about as common as divorces messy enough to require the intervention of a judge.

Take the dispute between two owners of real estate properties rented out to legal cannabis dispensaries described below as an example. If you no longer see eye to eye with your business partner, contact a San Diego business partnership dispute lawyer before your business partner shows their worst side.

Lawsuit Over San Diego Cannabis Businesses Turns Ugly

Salam Razuki and Ninus Malan owned several legal cannabis businesses in the San Diego area together, but by 2018 their partnership had gone bad. Razuki sued Malan for control of the Balboa Avenue Cooperative in Kearny Mesa. While the lawsuit played out in court, Razuki took to intimidating Malan by hiring gang members to threaten him and steal his mail. In August, Malan filed a restraining order against Razuki.

Razuki and two other business partners, Sylvia Gonzales and Elizabeth Juarez, conspired to hire a hitman to kill Malan. Razuki said that he was tired of his disputes with Malan in civil court costing so much money. They met with the hitman early in the fall of 2018 and discussed a plan where the hitman would persuade Malan to travel with him to Tijuana in November, at which point the dirty deed would take place. Gonzales went across the street to Golden Bloom, another cannabis dispensary the parties owned, and withdrew $1,000 in cash, which she gave to the hitman as a deposit.

As it turned out, the “hitman” was actually an FBI informant. In November, the informant met with Razuki and claimed to have killed Malan, After which, the informant arrested Razuki, who was later charged with conspiracy to commit murder. Then, in August 2019, Malan filed a civil lawsuit against Razuki, seeking money damages for the emotional distress Razuki had caused him.

Contact Foldenauer Law Group About Bitter Disputes Between Business Partners

Most breakups of business partnerships do not devolve into physical violence, but they can still get very unpleasant. A business dispute lawyer can help you resolve your differences with the business partner from whom you have been trying to separate yourself. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.

Jack in the Box Settles Lawsuit With Franchisees After New CEO Assumes Role

September 17, 2021August 11, 2021 by foldenauer.law

Operating a company on a franchise model can be profitable both for the parent company and for the small business owners that operate individual franchise locations (called “franchisees”). The parties get to divide the decision-making responsibility in a way that makes sense. The parent company is responsible for deciding the brand’s direction and projecting an image that resonates with customers, while the franchisees are responsible for the operation of their own franchise locations. The parties also share expenses and profits, and this is often the cause of disputes between franchise owners and the company with which they franchise. For example, Jack in the Box restaurants recently settled a lawsuit with a group of its franchisees, but in this case, the issue was transparency about marketing efforts. If you are a franchise owner involved in a dispute with the company from which you franchise, contact a San Diego business law attorney.

Franchisees Have Had Enough of Jack in the Box Clowning Around With the “Advertising Budget”

Jack in the Box hamburger restaurants have been a recognizable fixture in San Diego since the 1950s, and the company has successfully conducted some memorable advertising campaigns: from the “Jack’s Back” commercials in the 1990s to the bowl haircut commercials of the fall of 2009. It has also had its share of image problems, such as when shipments of meat from Australia, destined for U.S. restaurants, were supposed to contain beef but actually contained horse meat and kangaroo meat, and the less said about the “Angus beef” controversy of 2007, the better.

The dispute that settled between Jack in the Box and a group of its franchisees was something different, however. The franchisees were frustrated because, starting in 2017, sales at most of the restaurant’s locations declined, and the franchisees blamed insufficient advertising. They alleged that Jack in the Box CEO Lenny Comma was making irresponsible cuts to the advertising budget, and to make matters worse, he refused to show them the budget when asked. The franchisees began to call for the removal of Comma. The company, however, did not remove him. Instead, he left the company when he retired in early 2020. The new CEO, Darin Haris, was much more accommodating to the franchisees. In late 2020, Haris settled the lawsuit with the franchisees. The details of the settlement have not become public, so it is unclear how much money the franchisees received.

Even though this lawsuit settled, reaching an agreement cost a lot of money for the franchisees and for the Jack in the Box. The sooner you contact a business law attorney, the sooner you can stop losing money and start finding solutions.

Contact Foldenauer Law Group About Franchise Disputes

A business dispute lawyer can help you resolve your differences with the company from which you franchise a restaurant or other kind of business, and the sooner you contact a lawyer, the better. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.

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