AVOIDING LITIGATION
By Frank Mitchell Corso, Small Business Developer

Franchisees as well as all businesses can have Law suits among the "Partners."

Recently our office had two National Franchise holders sue each other. Why?

There was no clearly worded agreement between them. The agreement did not provide a clear basis for a "Buy Out" price in the event one person wanted to leave. Nor did it provide clearly for a restrictive covenant (limiting the distance in which the departing partner could open a competing business).

All agreements must be complete and concise on Buy Out clauses.

There must be a specifically detailed "formula" for a buy out price. The price must be based on a Reasonable Marketable Value so as not to make payment terms unbearable or most important - unmeetable.

Too often in the anxious periods of entering into a business, an agreement between "Partners" is put off. It becomes a "we'll take care of it later," thing. Frequently, that later period never arrives.

Too often the "Partners" rely on a handshake. There may be a family relationship.

But, all too often the lack of Agreement or a poorly worded Agreement-leads to the place you do not want to be - a Law suit.

When Litigation can not be avoided, our Law office vigorously presses the Law suit. It is the only way to bring it to a quick conclusion.

To be involved in Summons/Complaints, Depositions and all that goes into a Law suit is emotionally draining to most business people. That is forgetting the expense involved.

BOTTOM LINE:

1. Have a written Agreement
2. Make sure it is complete and in detail
3. If a Law suit, press the Law suit vigorously