At Brown & Kannady, LLC, we can provide periodic legal audits for our clients to ensure that they are in compliance with state and federal laws. As franchise lawyers we provide thorough diagnostics covering six core areas related to successful business operation.

Here is a beginning list of questions we would ask to assure that you are adequately protected.

Corporate/limited liability company issues
  • Are you operating under the most appropriate entity for your business and situation?
  • Does your entity choice maximize available tax advantages?
  • Is your business operating as either a corporation or a limited liability company to protect
    your personal assets from your business’s creditors?
  • If you are operating as a corporation, should you be an S corporation or a C corporation?
  • Are you annually assessing whether you should be an S corporation or a C corporation?
  • Do you have a buy-sell agreement? If so, is it funded by insurance?
  • Are you leaving yourself personally vulnerable to attack by failure to protect your corporate status? For example, do you:

    • Hold shareholder and board of director meetings at least annually
    Prepare minutes of these meetings
    File annual reports with the Secretary of State
    Protect your “corporate veil” by maintaining separate corporate and personal
    bank accounts
    Sign corporate documents in a corporate capacity

  • Is your business owned by more than one individual? Do you have a shareholder agreement or an LLC operating agreement that addresses the following:

    • That shares of your company’s stock or membership interests cannot be conveyed to a third party without first offering the other existing owner(s) the opportunity to acquire the shares or membership interests

    What will occur upon the death of an owner
    What will occur upon the disability of an owner
    What will occur upon the bankruptcy or divorce of an owner
    What will occur upon the termination of employment of an owner
    What will occur if there is disagreement among the owners

Customer and vendor contracts

  • Do you have your own form contracts for offering your product or service, or do you sign your customer’s or vendor’s “form” contracts that may not accurately fit the products or services and are likely to be drafted one-sided in favor of the customer or vendor?
  • Do you have your own form Non-Disclosure Agreement that you use before you enter into discussions with new customers and vendors?
  • Do your customer and vendor contracts have provisions that cover the following:

    • Clear language addressing the independent contractor status of the parties
    Appropriate indemnification, confidentiality and non-solicitation language
    Any disputes will be decided by the laws of your state and located in the county where your office is located
    Appropriate limitation of liability provisions limiting your company’s liability
    Appropriate waiver of warranty provisions
    Personal guarantees by the owner(s) of your customer/client

Protecting Intellectual Property and business assets

  • Do key employees sign employment agreements, legally enforceable non-competition agreements, or non-solicitation agreements relating to your customers and/or employees?
  • Do you have your employees and contractors sign non-disclosure agreements relating to your business assets and information?
  • How do you maintain the confidentiality of your trade secrets?
  • Do you have trademarks and service marks registered to protect the names and logos of your business and its products? Do you regularly review the status of your registered trademarks and service marks?
  • Have you obtained copyright registrations to protect written materials and software?
  • Do you use work-for-hire agreements that delineate that ideas and inventions developed by employees or independent contractors working for your company are your company’s property?
  • Have you recently been denied a trademark?
  • Have you had a lawyer review the reasons for the denial to determine if re-filing is appropriate?
  • Have you reviewed the foreign trademark application process to determine if you are fully protected in the US and abroad?

Internet issues

  • Do your internet domain names infringe on another company’s trademarks or service marks?
  • Do you have all applicable consents in place for content on your website?
  • Do you have all applicable consents for website links or framing?
  • Do you have appropriate disclaimer and privacy policies on your website?
  • Do you have adequate terms of use for your website?
Business property
  • Do you lease space? Do you have the most favorable terms in place?
  • Have you hired a lawyer to review and negotiate the terms of your lease to make it more favorable for you?
  • Are you and your landlord in full compliance with all lease terms?
  • Does your lease have an option provision, and, if so, do you know the date by which you have to exercise this option or otherwise lose the right to do so?
  • Do you own your space or are you planning to purchase it?

Legal audits can assist you in laying the proper groundwork so that you can be successful long term in your endeavors.