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Structuring Your Business For Success

If you are purchasing a franchise, one of the things you want to consider is the nature of your ownership. If you own the business as a sole proprietor, you will carry all of the potential liability associated with your franchise—an obvious disincentive to purchasing the franchise in your own name. So instead, most entrepreneurs form a business that will be the owner of the franchise. Forming a separate business entity not only acts as a shield against potential liability, but it can also help you take advantage of several important tax benefits. California franchisee lawyer Doug Luther can help you determine how you should structure your business and what will be required when it comes to formation.

What Type of Entity is Right for You?

Creating a business entity can have both advantages in reducing liability and providing structure to a business partnership. However, forming a business is not a one-size-fits-all decision. There are several common entity structures, each with its unique advantages and disadvantages. We help our clients choose which type of entity is best for them:

  • Partnership
  • Limited liability partnerships (LLP)
  • Limited liability companies (LLC)
  • Corporation

The type of entity you choose is an important step in your business. We work closely with our clients to help them make the right choice that will serve their business needs for years to come.

Formation Is More Than Filling Out Form Documents

The key to a properly functioning business and one of the best ways to reduce the risk of disputes among partners is to get the proper documentation and safeguards in place in a business entity. We will assist you with choosing and forming a business entity and then can draft whatever foundational corporate documents you may need:

  • Partnership agreements
  • Operating agreements
  • Articles of Incorporation
  • Bylaws
  • Shareholder or stockholders agreements
  • Contribution agreements
  • Stock option agreements

We prepared tailored, fully customized legal documents that will provide the protection and structure you need. In addition, because these documents will form the corporate foundation for your business, we take the time to draft documents specifically suited to your specific business.

In more complex situations, such as where there are multiple owners, we work with the franchisee and its owners to prepare the appropriate operating, membership, or shareholder agreements. This can be particularly important where multiple persons are buying or investing in a franchise together and want to protect their rights in the business and make sure they are all on the same page. A minority non-controlling owner of the franchise will especially want to safeguard their rights vis-à-vis the franchise. By properly providing protections, all parties know their rights and where they stand in the ownership of the business. Drafting the right documents can prevent future disputes and help your business run smoothly for years to come.

Long-Term Relationships and On-Going Representation

We work with our partners to ensure your business entity is properly formed and you are kept up to date on any annual filings required to maintain the business entity. Failing to renew your registration or other related filings can cause sudden and unexpected issues. We track any registration or filing requirements you may have so that we can make sure your business entity is in full compliance with all state and local requirements.

We also provide operational guidance for our clients, whether it is a “big picture” issue or related to your day-to-day operation. For example, we can provide you with advice with the following:

At Luther Firm, PC, our goal is to serve as your trusted partner not only during formation but throughout the life of your business.

Let’s Discuss Your New Business Venture

A good start is the best beginning. We understand the challenges and trepidations of starting a new business. Let us help you face those challenges with confidence and position yourself for success. If you are purchasing a franchise, we can help you choose the business entity that best meets your needs. Whether you are in Orange County, Southern California, or beyond, call or email us today to get started.