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Hackensack Business and Commercial Law Blog

Now that summer is over, the real work starts

The summer is coming to a close, but for many of us Labor Day marks a time of new beginnings. It is not just the beginning of the school year, either. A summer vacation can put a whole new spin on life. A couple of weeks in Cape May could be just the thing to trigger a new business concept. A modest win at an Atlantic City casino -- while they're still open -- could give a budding entrepreneur the push she needs to put her idea to work.

The thing about starting a business is that there are so many details to take care of before you do anything else. You need to think about how the business will be organized -- as a sole proprietorship, a partnership, a limited liability company, an S corporation?

Summer's over, and the real work starts now; an attorney can help

In our last post, we were talking about the rejuvenating effects of a summer break. While some of us spent our time off thinking about our next nap, others spent their breaks dreaming about business opportunities. Now that Labor Day has passed, we all have to put our white shoes and tank tops away and get back to work.

It is time to get moving on that business idea.

No detail is too small when you are starting a company, but all the small details are a bit of a buzz kill. Your enthusiasm ebbs just a little with every hour spent on these issues and not on the big picture, not on realizing your dream.

Attacked from all sides, is franchising on the chopping block? p3

The California State Legislature has passed a law that drew strong support from franchisees and sharp criticism from franchisors across the country. The law, if signed by Gov. Jerry Brown, will have no legal effect on operations here in New Jersey -- yet. Other states, including ours, could follow the Golden State's example.

National franchisors may not jump to make the standards imposed by this bill uniform across their networks, but franchisees may well begin to lobby for similar laws in their own states. Whatever else happens, though, if the bill becomes law, the relationship between franchisee and franchisor could be even more complicated.

Focus: major business relocation to Camden announced

The City of Camden "is in the midst of a comeback," states an editorialist in a recent South Jersey Times article, with that writer lauding the state's Economic Opportunity Act of 2013 as the catalyst for promoting regional economic development.

Indeed, notes Debra P. DiLorenzo (the president Chamber of Commerce Southern New Jersey) in an opinion piece written for the publication, recent salutary business development in the area has led to a "Camden renaissance."

Here's why, she says.

Attacked from all sides, is franchising on the chopping block? p2

One of the reasons an entrepreneur will purchase a franchise is that the brand is already established. The reputation of the restaurant chain, for example, will drive traffic into the franchise location without a lot of marketing from the franchisee. The franchisor benefits, of course, because the chain is expanding, the brand has a new or increased presence in that market.

The effect on the brand is an argument made by both proponents and opponents of a bill in the California Legislature. A quick update from our last post: The Assembly passed an amended version of the bill last week and sent that version to the Senate for concurrence. The process is the same as New Jersey's: The two houses must pass identical versions of the bill before it can go to the governor. That takes some negotiation at times. It is not clear what the Senate will do in this case.

Attacked from all sides, is franchising on the chopping block?

Earlier this month, we posted about the National Labor Relations Board's decision to lump McDonald's Corp. and a number of New York City franchisees together as the employers of workers attempting to unionize. In June, we wrote about franchisees' opposition to a minimum wage hike in Seattle. Another dispute is brewing in California, this time over a proposed state law that would increase the protections afforded to franchisees.

It's hard not to wonder if the franchise model itself is under fire. For those of us who remember the old Time-Life "Mysteries of the Unknown" commercials, can this be dismissed as chance? All of this activity could be a coincidence, but it is hard to dispute that real change is just around the corner.

Is a sole proprietorship the right business model for you?

Someone once said that you only need two things to start a business: a product and a customer. There are entrepreneurs out there who would argue that all you need is an idea. Still others would say that you need a business plan, startup capital and investors, office or production space, marketing materials and a solid team of advisers.

However you arrive at your business, you should think about what kind of legal entity it should be. If you plan to open a factory with hundreds of workers, you might decide your business should be a corporation. If you are the business, though, you might opt to be a sole proprietorship.

License law caught between a Rolling Rock and a hard liquor place

New Jersey's liquor license law is under attack. Again. Commercial real estate developers may be the most vocal opponents, but there is a long line of businesses behind them. Even the restaurant association agrees that the law should be changed.

The state still operates under laws written in the late 1940s that allocated one liquor license for every 3,000 New Jersey inhabitants. It made sense back then, according to one developer, but the balance between cities, suburbs and ex-urbs skews the process now. The developable space is in the ex-urbs, where shopping malls should be going up, but there are so few residents that the licenses are cost-prohibitive.

NLRB: McDonald's, franchisees just one big unhappy family p2

A ruling from the National Labor Relations Board is worrying franchisees and franchisors alike. The board said that McDonald's USA LLC and its franchisees share the responsibility for the welfare of the franchisees' employees. For the workers, the decision clears the way to improve wages and working conditions by unionizing.

The decision is a preliminary step in the matter. Before any complaints could be authorized, the NLRB first had to determine if both the corporation and the individual franchisee could be named as respondents. According to the NLRB's statement, the board has received 181 complaints about McDonald's since November 2012, but only 43 of those will add McDonald's to the case. McDonald's has indicated it will appeal this decision, making appeals in any adjudicated matters likely as well.

NLRB: McDonald's, franchisees just one big unhappy family

If you felt a seismic shift in franchise law this week, you can thank the National Labor Relations Board. The board has handed down a decision that could dramatically change the relationship between franchise workers and their employers as well as between franchisees and franchisors. The focus is the employees' right to unionize. If franchisor McDonald’s USA LLC loses on appeal, the impact will be much broader.

The charging parties are workers at McDonald's franchise stores in New York City. They claim that their employers fired them as retaliation for trying to unionize. What makes the case unusual is that they named both the franchisees -- the owners of the individual stores -- and McDonald's as respondents.

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